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Reps. Kildee, Evans Introduce House Version of Working Families Tax Relief Act

June 6, 2019 at 4:45 PM

Update, July 2: we’ve added a table at the end of this post showing the number of households, individuals, and children in each state whom the Kildee-Evans bill would benefit.

House Ways and Means Committee members Dan Kildee and Dwight Evans introduced a bill today to substantially expand the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), which would boost the economic well-being of 46 million low- and moderate-income households with 114 million people, we estimate based on Census data.

The Kildee-Evans bill is the companion to a bill (S.1138) that Senators Sherrod Brown, Michael Bennet, Richard Durbin, and Ron Wyden, with 42 co-sponsors, introduced earlier this year. Some of its EITC provisions are similar to ones that Ways and Means Chairman Richard Neal, Rep. Bill Pascrell, and other policymakers have championed. Its CTC expansions are similar in some ways to proposals from Reps. Rosa DeLauro and Suzan DelBene.

The EITC and CTC increase employment, reduce poverty, and improve children’s life prospects, studies indicate. The bill’s EITC and CTC expansions — combined with overdue legislation to raise the minimum wage and provide paid family and medical leave, among other things — would help address the long-term wage stagnation that has affected households of all racial and ethnic backgrounds that earn low or modest wages.

The bill would expand the EITC for families with children by roughly 25 percent; substantially strengthen the very small EITC for workers who aren’t raising children in their homes (the sole group that the federal tax code now taxes into, or deeper into, poverty); and provide a match for Puerto Rico’s new EITC. By themselves, these EITC expansions would benefit an estimated 35 million households with 75 million people.

The bill would make the CTC fully refundable so children in lower-income households, including those with little or no income, can benefit fully from it. Today, the CTC provides little or no help to millions of children and families with low incomes — the people who need it most. This fully refundable CTC is similar to a policy that a National Academy of Sciences committee made the centerpiece of its proposal to shrink child poverty.

The bill would also create a larger, fully refundable Young Child Tax Credit for children under age 6. This is a period of great importance and vulnerability in children’s lives, during which more adequate family income can improve poor children’s life opportunities, research shows. The Young Child Tax Credit would raise these families’ CTC to $3,000 per child under age 6, up from the current maximum of $2,000.

Taking its EITC and CTC expansions together, the bill would lift 29 million people above or closer to the poverty line, including 11 million children. It would cut the child poverty rate from 15 percent to 11 and cut the deep poverty rate among children — the share with family incomes below half of the poverty line — from 5 percent to 3. It would cut the overall poverty rate from 14 percent to 12.

A few examples illustrate the bill’s impact:

  • For a mother of a 4-year-old and a 7-year-old who makes $20,000 as a home health aide, the bill would raise her CTC by $2,210 and her EITC by about $1,460, for a combined gain of about $3,670.
  • For a married couple in which one spouse makes $45,000 as an auto mechanic and the other cares for their two young children full time, the bill would increase their EITC by about $1,460. They would also receive an additional $2,000 from the Young Child Tax Credit, for a total gain of about $3,460.
  • Consider a fast-food cook who works full time at the federal minimum wage and earns $14,500, only slightly above the poverty line for a single individual (an estimated $13,340 in 2019). The cook now pays more than $1,250 in combined federal income and payroll taxes (counting just the employee share of the payroll tax); as a result, the tax code pushes her below the poverty line. The bill would increase her EITC by about $1,530, so she would no longer be taxed into poverty.

The EITC and CTC expansions that the Kildee-Evans and other bills propose should be central to the coming debate over how to restructure the 2017 tax law, which largely overlooked working-class Americans while providing large tax cuts to affluent households and profitable corporations. Undoing its poorly designed or targeted provisions should generate savings that could go in part to low- and moderate-income households through tax-credit expansions like these.

TABLE 1
Households, Individuals, and Children Benefiting From Working Families Tax Relief Act, by State
State Number of Households Number of Individuals Number of Children
Total U.S. 45,699,000 114,034,000 49,335,000
Alabama 747,000 1,837,000 787,000
Alaska 107,000 269,000 123,000
Arizona 1,018,000 2,610,000 1,164,000
Arkansas 476,000 1,187,000 523,000
California 5,465,000 14,344,000 6,079,000
Colorado 748,000 1,821,000 781,000
Connecticut 400,000 965,000 414,000
Delaware 120,000 298,000 132,000
Dist. of Columbia 81,000 183,000 81,000
Florida 3,069,000 7,345,000 2,943,000
Georgia 1,565,000 3,978,000 1,749,000
Hawaii 189,000 475,000 206,000
Idaho 259,000 668,000 303,000
Illinois 1,703,000 4,308,000 1,885,000
Indiana 985,000 2,430,000 1,085,000
Iowa 428,000 1,047,000 472,000
Kansas 415,000 1,040,000 476,000
Kentucky 697,000 1,689,000 725,000
Louisiana 751,000 1,846,000 815,000
Maine 187,000 414,000 164,000
Maryland 734,000 1,829,000 809,000
Massachusetts 788,000 1,866,000 770,000
Michigan 1,435,000 3,450,000 1,475,000
Minnesota 716,000 1,754,000 784,000
Mississippi 496,000 1,250,000 549,000
Missouri 923,000 2,213,000 952,000
Montana 163,000 370,000 154,000
Nebraska 266,000 681,000 317,000
Nevada 436,000 1,082,000 475,000
New Hampshire 153,000 350,000 142,000
New Jersey 1,049,000 2,661,000 1,137,000
New Mexico 334,000 841,000 368,000
New York 2,619,000 6,534,000 2,741,000
North Carolina 1,543,000 3,745,000 1,592,000
North Dakota 101,000 248,000 113,000
Ohio 1,707,000 4,058,000 1,767,000
Oklahoma 617,000 1,551,000 697,000
Oregon 591,000 1,375,000 571,000
Pennsylvania 1,688,000 4,059,000 1,729,000
Rhode Island 135,000 322,000 133,000
South Carolina 778,000 1,867,000 785,000
South Dakota 124,000 307,000 140,000
Tennessee 1,026,000 2,487,000 1,066,000
Texas 4,143,000 11,142,000 5,097,000
Utah 426,000 1,248,000 616,000
Vermont 83,000 187,000 75,000
Virginia 1,116,000 2,694,000 1,145,000
Washington 964,000 2,385,000 1,045,000
West Virginia 273,000 661,000 276,000
Wisconsin 778,000 1,858,000 819,000
Wyoming 83,000 203,000 92,000

Source: CBPP estimates based on 2015-2017 American Community Survey data and March 2018 Current Population Survey data.


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