House Democrats passed the $1.75 trillion Build Back Better (BBB) Act on Friday, which includes a one-year extension of the enhanced child tax credit.
Biden had originally sought to keep the enhanced credit through 2025, but it was trimmed during negotiations.
“The Build Back Better framework will set the U.S. on course to meet our climate targets, create millions of good-paying jobs and grow our economy from the bottom up and the middle out,” Biden said.
Democrats are seeking to extend the enhanced child tax credit (CTC) for one more year in 2022. The credit was increased this year, to be worth up to $3,000 per child 6 to 17 and $3,600 per child under 6.
Additionally, families have received half of the credit in monthly payments since July. BBB aims to make the expansion amounts advanceable.
The credit remains fully refundable, meaning that families do not need any earned income to receive the money.
The BBB plan says it will support parents who are working, looking for work or participating in an education or training program, and who are making under 2.5 times their state’s median income, by covering the cost of child care for children under 6 so that child care costs no more than 7% of a family’s income.
The bill, which is the largest expansion of the social safety net in decades, includes provisions on universal pre-K, climate change, health care and immigration, among others.
The bill would also provide over $18 billion in the first three years to create universal pre-kindergarten. Then, the program would be funded by a mixture of federal and state funds.
The House bill includes four weeks of paid parental and medical leave, at a cost of around $200 billion, where the Senate bill included none.
The bill is of course subject to contest on the House floor, mainly because of its proposed tax changes.
To pay for the bill, House Democrats are proposing increasing some taxes on businesses and the wealthiest Americans. It includes a 5% surtax on adjusted gross income (AGI) over $10 million for individuals and an additional 3% on AGI over $25 million.
At the same time, the bill also raises the cap on the state and local tax deduction from $10,000 to $80,00 in 2021, which will benefit the richest households in the country, according to the Tax Foundation.
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