Right now, millions of American families are left behind by our tax code. Americans are working more than one job as cashiers, waiters, health care workers and teachers, but are still struggling to get a foothold in the middle class. People who work tirelessly to keep our country running every single day deserve to have a tax system that works for them.
We can do better to build an economy that works for everyone. The 2017 Republican tax cuts bill gave benefits to our nation’s wealthiest individuals and corporations, instead of supporting middle class and low-income families. Congress has the chance to change this and put working families first.
As members of the House Ways and Means Committee, we have introduced a bill to expand on policies that are proven success stories for low- and moderate-income families. The Working Families Tax Relief Act would expand both the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).
The EITC is a refundable tax credit for low-income workers and the CTC is a partly refundable tax credit of up to $2,000 per qualifying child for those raising a family. The EITC and Child Tax Credit are especially helpful to African American and Hispanic women, largely because people of color are far likelier to work in low-paid occupations, work part-time or part-year instead of full-time and year-round, and have lower wages within a given occupation.
These tax credits have already been highly successful and effective at lifting many American families out of poverty, helping to grow the middle class and put money in the pockets of working people. The Working Families Tax Relief Act would:
- Expand the EITC for families with children by about 25 percent. Families with children would receive more resources to pay for child care, health care and other needs.
- Significantly expand the EITC for workers without children and make the credit available for people starting at age 19 up to age 67. Currently, workers without children can still be pulled under the poverty line by their tax liability — an expanded EITC would help prevent this.
- Allow workers to draw a $500 advance payment on their EITC. Four in 10 Americans say they couldn’t afford an emergency expense of $400 without borrowing money or selling assets. This bill would make sure families aren’t forced to turn to predatory payday lenders when the car breaks down or other unexpected expenses come up.
- Make the CTC fully refundable and adjusted for inflation, so the more than 26 million children who were left out of the 2017 Republican tax-cut law get the support they deserve.
- Create a Young Child Tax Credit to provide extra support to children age five and under, when research says they need it most.
A good example of the impact of this bill would be a fast-food cook who works full-time at the federal minimum wage earning $14,500 a year, only slightly above the poverty line for a single individual, estimated to be $13,340 in 2019. The cook now pays more than $1,250 in combined federal income and employee-side payroll taxes; as a result, the tax code pushes them below the poverty line. The bill would increase their EITC by about $1,530, so they would no longer be taxed into poverty.
The federal government has a responsibility to make life easier for our working families and not to tax them into poverty. Too many Americans have been left behind in the current economy, and it’s time we had a tax system that does more for them. The Working Families Tax Relief Act would be a life-changing bill for many, and we urge Congress to move forward on this legislation.
Evans and Kildee are members of the Ways and Means Committee.