Director of Federal Tax Policy
The full House next week will consider the Ways and Means Committee’s recently passed Child Tax Credit (CTC) bill. A recent Tax Policy Center (TPC) analysis confirms our previous critical assessments of the proposal, finding that it would make many relatively affluent people better off while making low-income working families poorer.
As we explained, the bill makes three main policy decisions that, taken together, constitute poor policy:
TPC’s analysis illustrates how the combined effects of these policy decisions harm low-income families while benefiting many with higher incomes. As the first chart below shows, families with children that have incomes between $100,000 and $200,000 would gain, on average, nearly $550 apiece in 2018, while families with incomes below $40,000 would lose, on average.
The Ways and Means bill’s effects on households’ after-tax incomes are also striking. As the next chart below shows, households earning less than $20,000 in 2018 would face, on average, a drop in their after-tax income of more than 3 percent while those with incomes between $100,000 and $200,000 would get a boost in their after-tax earnings.
TPC’s analysis underscores the downsides of the Ways and Means bill for low-income working families. These are parents who work for low or modest wages as cashiers, waitresses, home health aides, and day laborers; they clean office buildings or perform other low-paid work. Policymakers should reverse course and put these families’ needs first, rather than last, when the full House considers the bill.