Menendez, Booker, Democrats Introduce Legislation to Cut Taxes for Working Families, Expanding Earned Income and Child Tax Credits

Menendez, Booker, Democrats Introduce Legislation to Cut Taxes for Working Families, Expanding Earned Income and Child Tax Credits

Bill would boost incomes for more than 1 million NJ households and 2.6 million individuals, including 1.3 million children

 

WASHINGTON, D.C. – U.S. Senator Bob Menendez, a senior member of the Senate Finance Committee that oversees tax policy, Senator Cory Booker and 42 Democratic colleagues today introduced the Working Families Tax Relief Act that would cut taxes for working people and families by expanding the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), two of the most effective tools to put money back in the pockets of workers and pull children out of poverty. The legislation will boost incomes of 1.05 million New Jersey households and 2.66 million individuals, including 1.14 million children.

“Too many families are working more hours yet falling further behind, as costs for child care, housing, healthcare – you name it – continue to rise, while wages haven’t budged,” said Sen. Menendez.  “By expanding the Earned Income and Child Tax Credits we can put real money back in the pockets of New Jersey workers, lift children out of poverty and help millions of families secure a foothold in the middle class.”   

“Millions of Americans are working harder and harder and still falling behind,” said Sen. Booker. “The Trump tax bill was a $1.5 trillion giveaway to the biggest corporations and wealthiest Americans. This sweeping legislation moves us towards a fairer tax code that helps those who need it most—working Americans and families struggling to make ends meet.”

According to the Center for Budget and Policy The Working Families Tax Relief Act would:

  • Boost incomes of 46 million households, 114 million people, including 43 million children.
  • In New Jersey, the bill would benefit 1.05 million households and 2.66 million individuals, including 1.14 million children
  • Lift 7 million people out of poverty, including 3 million children.
  • Expand the EITC for families with children by roughly 25 percent.
  • Make the CTC fully refundable, helping more than 26 million children who were left out of the Trump tax law get the support they deserve.
  • Create a Young Child Tax Credit to provide extra support to children five and under, when research says they need it most.
  • Allow workers to draw a $500 advance payment on their EITC when unexpected expenses come up.

 

Specifically, the legislation includes:

EITC for Workers without Children

 

Today, more than 5 million workers without children are taxed into, or deeper into, poverty. The Working Families Tax Relief Act would fix that by raising the maximum credit for childless workers from about $530 to $2,070 and expanding the age range to cover workers starting at age 19, instead of 25, through age 67, instead of 64.

EITC for Families with Children

 

The Working Families Tax Relief Act increases the EITC for families with children by approximately 25 percent. It raises the maximum EITC for families with one child from about $3,530 to $4,410, for families with two children from about $5,830 to $7,290, and for families three or more children from about $6,560 to $7,650.

CTC for All Kids

 

President Trump and Congressional Republicans have repeatedly touted their tax law’s increase in the CTC. But the reality is their tax law left out 26 million children in low- and moderate-income working families who received less than the full $1,000 per-child CTC increase. By making the CTC fully refundable for the first time, the Working Families Tax Relief Act ensures children in low- and moderate-income families aren’t left out. Under the Working Families Tax Relief Act, families could choose to receive monthly installments to help support children’s needs throughout the year instead of one lump sum. The credit would also be adjusted for inflation moving forward, so it wouldn’t lose value for families over time.

 

Young Child Tax Credit

 

The Working Families Tax Relief Act would create a new Young Child Tax Credit to provide families with an extra $1,000 for each child five years of age and younger, up to $3,000 per family. Research shows investing in children in these formative years can set children up for success later in life. The Young Child Tax Credit would also be available on a monthly basis and indexed for inflation.

 

$500 Advance

 

Four in 10 Americans say they couldn’t afford an emergency expense of $400 without borrowing money or selling assets. That leaves many people vulnerable to predatory payday lenders that trap them in a cycle of debt. The Working Families Tax Relief Act gives people an alternative to payday lenders by allowing workers to draw a one time, interest-free $500 advance on their EITC payment.

 

Puerto Rico Fairness

 

The Working Families Tax Relief Act provides CTC parity for families in Puerto Rico who are currently treated as second class citizens and boosts Puerto Rico’s new Commonwealth-funded EITC.

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