Obama’s Stimulus Plan Includes Child Tax Credit Expansion
Part of Obama’s economic stimulus package includes an expansion of the child tax credit for low income Americans. The Wall Street Journal outlines the plan here:
Mr. Obama’s advisers on Monday outlined a potential new feature of the plan to congressional aides, saying they would press for a tax change that would allow more families that earn too little to pay income taxes to claim at least some of the $1,000-per-child tax credit. That would amount to an income subsidy, since it would refund taxes they are too poor to pay.
The plan would grant an estimated 5.5 million poor children access to the credit for the first time, and expand the tax benefit for millions more poor children who currently qualify for only a partial credit, according to its advocates. The change has been sought by Democrats and some moderate Republicans for years.
As of Jan. 1, a household must earn $12,500 a year to be eligible to claim any of the child credit. The proposal under discussion would lower that threshold, likely to $3,000, a level favored by top House Democrats, at a possible cost to taxpayers of $18 billion, said individuals familiar with the discussions. Currently, a part-time working mother earning $5,000 a year would get no child credit. With a $3,000 threshold, she would get $300.
This change to the child tax credit is long overdue. Furthermore, the expansion is targeted to low-income Americans who are likely to spend those extra dollars on necessary household items. Thus, we can expect this provision to have an immediate effect on the economy.
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