Biden's budget would cut taxes for all low-income households but especially parents, analysis shows
asheffey@businessinsider.com (Ayelet Sheffey)
A Tax Policy Center report found Biden's budget would cut taxes for parents by $3,200 in 2022.
This is a result of Biden's expanded child tax credit, which gives parents $300 monthly benefits.
Democrats are pushing to make the credit expansion permanent beyond Biden's 2025 extension.
President Joe Biden's recent budget proposal included changes in the tax code that would hike taxes for corporations while expanding tax credits for families.
A recent analysis found these changes would dramatically cut taxes for families with children in 2022 - and for all low-income Americans.
The Tax Policy Center's Howard Gleckman released an analysis on June 9 studying the impact of Biden's budget on American households. He found that Biden's proposals to expand the child tax credit and Earned Income Tax Credit, along with a corporate tax hike to fund infrastructure, would increase taxes for the top 1% by an average of $213,000 in 2022, while those in the top 0.1% would pay an average of $1.6 million more.
However, low- and middle-income households would see their taxes reduced under Biden's plans. Gleckman wrote that low-income households would get an average $620 tax cut in 2022, while taxes for families with children would be cut by an average of $3,200, thanks to the child tax credit.
Gleckman noted, though, that those households would see lower tax cuts in 2031 than in 2022.
Video: Big Companies Can Afford to Pay Higher Taxes, Says Biden Economist (Bloomberg)
"For example, taxes for middle-income households would fall by only about $90 in 2031, compared to $640 in 2022," he wrote. "For the most part, those more modest 2031 tax cuts are because Biden's CTC [child tax credit] expansion is scheduled to expire in 2025."
About three-quarters of middle-income families would see their taxes increase by an average of $300 as a result of Biden's proposed corporate tax hike, Gleckman added, but the majority of tax increases would fall on those making over $200,000.
Biden's coronavirus relief package revamped the $2,000 child tax credit, increasing the amount to $3,600 per child 5 and under and to $3,000 for every kid between 6 and 17 per year. It also gave households the option to receive a monthly payment of a one-time sum for the year, and expanded it to include low-income families with no tax obligations.
But while Biden plans to expand the credit through 2025, some Democrats want the payment to be permanent. In March, 41 Democratic senators sent a letter to Biden urging him to make the monthly payments permanent, saying that "no recovery will be complete unless our tax code provides a sustained pathway to economic prosperity for working adults and families."
However, Insider reported last week that moderate Democrats may be more reluctant to throw their support behind a permanent expansion. Sen. Tom Carper of Delaware said he still hadn't made up his mind.
"I was a big supporter of enlarging it and extending it," he told Insider, referring to bulking up the credit. "I thought it was the right thing to do as part of a package in a pandemic and I'm open to it, but I've not come to any conclusions."
Other moderate Democrats, like Sen. Jeanne Shaheen of New Hampshire, expressed the same sentiment. But the Democratic architects of the child tax credit, including Colorado Sen. Michael Bennet, echoed the Tax Policy Center's analysis in that the credit would significantly benefit families with children.
"It's going to be an amazing moment in modern America where people actually see themselves and their families benefiting dramatically from something that we've done in Washington DC," Bennet told Insider. "It's going to make a huge difference to people."
asheffey@businessinsider.com (Ayelet Sheffey)
© Provided by Business Insider President Joe Biden. AP
A Tax Policy Center report found Biden's budget would cut taxes for parents by $3,200 in 2022.
This is a result of Biden's expanded child tax credit, which gives parents $300 monthly benefits.
Democrats are pushing to make the credit expansion permanent beyond Biden's 2025 extension.
President Joe Biden's recent budget proposal included changes in the tax code that would hike taxes for corporations while expanding tax credits for families.
A recent analysis found these changes would dramatically cut taxes for families with children in 2022 - and for all low-income Americans.
The Tax Policy Center's Howard Gleckman released an analysis on June 9 studying the impact of Biden's budget on American households. He found that Biden's proposals to expand the child tax credit and Earned Income Tax Credit, along with a corporate tax hike to fund infrastructure, would increase taxes for the top 1% by an average of $213,000 in 2022, while those in the top 0.1% would pay an average of $1.6 million more.
However, low- and middle-income households would see their taxes reduced under Biden's plans. Gleckman wrote that low-income households would get an average $620 tax cut in 2022, while taxes for families with children would be cut by an average of $3,200, thanks to the child tax credit.
Gleckman noted, though, that those households would see lower tax cuts in 2031 than in 2022.
Video: Big Companies Can Afford to Pay Higher Taxes, Says Biden Economist (Bloomberg)
"For example, taxes for middle-income households would fall by only about $90 in 2031, compared to $640 in 2022," he wrote. "For the most part, those more modest 2031 tax cuts are because Biden's CTC [child tax credit] expansion is scheduled to expire in 2025."
About three-quarters of middle-income families would see their taxes increase by an average of $300 as a result of Biden's proposed corporate tax hike, Gleckman added, but the majority of tax increases would fall on those making over $200,000.
Biden's coronavirus relief package revamped the $2,000 child tax credit, increasing the amount to $3,600 per child 5 and under and to $3,000 for every kid between 6 and 17 per year. It also gave households the option to receive a monthly payment of a one-time sum for the year, and expanded it to include low-income families with no tax obligations.
But while Biden plans to expand the credit through 2025, some Democrats want the payment to be permanent. In March, 41 Democratic senators sent a letter to Biden urging him to make the monthly payments permanent, saying that "no recovery will be complete unless our tax code provides a sustained pathway to economic prosperity for working adults and families."
However, Insider reported last week that moderate Democrats may be more reluctant to throw their support behind a permanent expansion. Sen. Tom Carper of Delaware said he still hadn't made up his mind.
"I was a big supporter of enlarging it and extending it," he told Insider, referring to bulking up the credit. "I thought it was the right thing to do as part of a package in a pandemic and I'm open to it, but I've not come to any conclusions."
Other moderate Democrats, like Sen. Jeanne Shaheen of New Hampshire, expressed the same sentiment. But the Democratic architects of the child tax credit, including Colorado Sen. Michael Bennet, echoed the Tax Policy Center's analysis in that the credit would significantly benefit families with children.
"It's going to be an amazing moment in modern America where people actually see themselves and their families benefiting dramatically from something that we've done in Washington DC," Bennet told Insider. "It's going to make a huge difference to people."
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