Will Biden Make the Child Tax Credit Permanent?

by

Biden’s recently enacted American Rescue Plan provides the credit for one year. It needs to be permanent.

The tax credit is transformative. It gives all but the richest a basic income of $3,000 per year per child under 18, topped up to $3,600 for kids under six. This will cut the child poverty rate in half.

President Biden personally told the House Democratic Caucus, in response to a question from Rep. Suzan DelBene of Washington state, one of the three prime sponsors of the credit, that he favors making it permanent. This was confirmed by press chief Jen Psaki, speaking to reporters on Air Force One.

However, some senior administration staffers favor extending it only four years, to limit the cost and need for offsetting tax increases. Biden will decide which way to go sometime in the next week, and his decision will be reflected in his next major bill, the American Families Plan.

A mere four-year extension would be a huge mistake. We don’t know who will be president and who will control Congress in 2025. We don’t know who will be House Speaker. The current speaker, Nancy Pelosi, has been a powerful supporter of a large and permanent children’s allowance.

The time to get this done—permanently—is now.

The credit costs about $113 billion a year. In that sense, the Child Tax Credit is competing with other Biden public-investment priorities that also need to be financed by tax revenues.

Biden’s first cut at a tax bill would raise some $300 billion a year by increasing individual and corporate tax rates. But there is more room, since Biden’s plan goes only partway to restoring the tax rates that were in effect under Obama.

There is also more revenue to be had from better tax enforcement, since virtually all of the big-ticket tax evasion comes from the very rich. Natasha Sarin, recently appointed as a deputy assistant secretary of the Treasury, calculated in a paper with Larry Summers for the National Bureau of Economic Research that better tax compliance could bring in about $100 billion a year, roughly the cost of the Child Tax Credit.

Let’s see—give all of America’s kids a fairer start in life, or let the richest get away with evading taxes? Bring it on!

A second Trump administration will cement a right-wing majority on the Supreme Court for a generation, and put our collective future in the hands of someone who will be virtually unchecked by our institutions. The country has shifted rightward, and the reverberations will ensue for potentially the next few decades. In this climate, a robust independent media ecosystem will be more important than ever. We're committed to bringing you the latest news on how Trump's agenda will actually affect the American people, shining a light on the stories corporate media overlooks and keeping the public informed about how power really works in this country.

Quality journalism is expensive to produce, and we don't have corporate backers to rely on to fund what we do. Everything we do is thanks to our incredible community of readers, who chip in a few dollars at a time to make our work possible. Any amount you give today will help us continue reporting on what matters to our democracy.

You can help power this newsroom by making a one-time donation or by becoming a member today.