Menendez Outlines Legislation to Help Struggling Families, Cut Child Poverty by 38%

Menendez Outlines Legislation to Help Struggling Families, Cut Child Poverty by 38%

American Family Act dramatically increases Child Tax Credit to put more $$$ in families’ pockets

UNION CITY N.J. – U.S. Senator Bob Menendez (D-N.J.), a senior member of the Senate Finance Committee that sets national tax policy, today visited the Union City Day Care Center to detail legislation he is cosponsoring to put more money in the pockets of low- to middle-income families and cut child poverty by nearly 40%.  The American Family Act of 2019 would overhaul the existing Child Tax Credit, increasing it to $300 per month, per child under the age of six and $250 per month, per child under 17, and, for the first time, making the credit 100% refundable.

“The American Family Act is the kind of bold action we need to give more low-income children, and especially children of color, a fighting chance of making it into the middle class,” said Sen. Menendez.  “Our legislation reforms the Child Tax Credit to reflect real-life challenges parents face.  We know, for instance, that while the birth of a child is a joyous event, it’s also an expensive one and a leading reason why families fall into poverty….  This is about leveling the playing field for children by providing a tax benefit to every family earning less than $150,000 a year.”


In New Jersey, 551,830 taxpayers claimed the Child Tax Credit in 2016, the last year data is available, for a total benefit of $633,369,000.  The American Family Act would expand that benefit to hundreds of thousands more New Jersey families, while giving most an increased benefit.

A recent report by the Columbia University Center on Poverty and Social Policy found the expanded Child Tax Credit under the American Family Act would cut national child poverty by 38% and deep child poverty by 50%, while virtually eliminating extreme (i.e. less than $2 per day) child poverty in America.  The bill would lift a total of 4 million American children out of poverty and 1.6 million out of deep poverty, while boosting incomes of millions of additional families.

“Our tax code is a reflection of our priorities as a country. This legislation marks a massive step towards ending the scourge of child poverty, and in doing so, will empower working families and help grow our economy,” said Sen. Cory Booker (D-N.J.), a cosponsor.

Specifically, the legislation would:

  • Create a New Expanded Credit for Children under six.  The bill would create a new Young Child Tax Credit (YCTC) of $300 per month ($3,600 per year) for children under six years of age, up from the current maximum of $2,000 per year.
  • Increase the Maximum Child Tax Credit for All Children under 17.  The bill would expand the Child Tax Credit (CTC) to $250 per month ($3,000 per year) for children 6 years of age or older, up from the current maximum of $2,000 per year.
  • Make Both Credits Fully Refundable.  The bill would make both the YCTC and CTC fully refundable, meaning that all low-income families would receive the full credit for each child.  The current CTC only begins to phase-in after a taxpayer has earned $2,500 of income and at a rate of 15 cents for every dollar of additional income.  In addition, only $1,400 of the $2,000 credit is refundable.  For these reasons, one-third of all children—27 million—do not currently receive the full $2,000 CTC credit.
  • Benefit the Middle Class.  The bill would provide a tax credit for all individuals with children who earn less than $150,000 per year and all married couples with children who earn less than $200,000 per year.
  • Index the Credit for Inflation.  The bill would index both YCTC and CTC levels for inflation (rounding to the nearest $50) to preserve the value of the credit going forward.  The current CTC is not indexed for inflation.
  • Set Up Advance Payments on a Monthly Basis.  The bill would call on the Treasury Secretary to set up monthly advance payments for the YCTC and CTC no later than a year after passage for taxpayers anticipated to receive a refund.  Monthly payments would smooth families’ incomes and spending levels over the course of a year, helping them make ends meet during difficult months.

Under the legislation, a married couple earning less than $150,000 a year with two young children under six would receive a $7,200 tax benefit, up from a maximum $4,000 today.  A couple making less than $150,000 with one child under six and one child aged 7-16 would receive $6,600, compared to a maximum $4,000 today.  A couple with two children ages 7-16 would receive $6,000, compared to a maximum $4,000 today.  Married couples making between $150,000 and $200,000 would receive an additional $300 per child under six over the current Child Tax Credit.

Sen. Menendez greets Union City, N.J. kindergartners whose families would benefit from the American Family Act.

Joining Sen. Menendez at today’s announcement were parents and kids who’d benefit from the legislation, including Joey Wong, a mother of three, ages three, six and eight who would qualify for an $850 monthly credit, and Jose Mena, who has two kids under six and would get $600 a month.

The bill is cosponsored by Sens. Menendez, Booker, Michael Bennet (D-Colo.), Sherrod Brown (D-Ohio), Tammy Baldwin (D-Wis.), Richard Blumenthal (D-Conn.), Ben Cardin (D-Md.), Bob Casey (D-Pa.), Chris Coons (D-Del.), Catherine Cortez Masto (D-Nev.), Tammy Duckworth (D-Ill.), Dick Durbin (D-Ill.), Kirsten Gillibrand (D-N.Y.), Kamala Harris (D-Calif.), Maggie Hassan (D-N.H.), Martin Heinrich (D-N.M.), Mazie Hirono (D-Hawaii), Doug Jones (D-Ala.), Pat Leahy (D-Vt.), Amy Klobuchar (D-Minn.), Ed Markey (D-Mass.), Jeff Merkley (D-Ore.), Chris Murphy (D-Ct.), Patty Murray (D-Wash.), Gary Peters (D-Mich.), Jack Reed (D-R.I.), Bernie Sanders (I-Vt.), Brian Schatz (D-Hawaii), Jeanne Shaheen (D-N.H.), Tina Smith (D-Minn.), Debbie Stabenow (D-Mich.), Jon Tester (D-Mont.), Chris Van Hollen (D-Md.), Elizabeth Warren (D-Mass.), Sheldon Whitehouse (D-R.I.), and Ron Wyden (D-Ore.).  Congresswomen Rosa DeLauro (D-Colo.) and Suzan DelBene (D-Wash.) introduced companion legislation in the House of Representatives.

The American Family Act has been endorsed by the following organizations: Center for American Progress, Center on Budget and Policy Priorities, Center for Law and Social Policy, Child Care Aware of America, Children’s Defense Fund, Community Change Action, Economic Security Project, First Focus, MomsRising, National Association for the Education of Young Children, National Women’s Law Center, Niskanen Center, Service Employees International Union, and Zero to Three.