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Biden’s American Rescue Plan
Since March 2020, the United States government has scrambled to find economic solutions to mitigate the financial impact of the Covid-19 pandemic on both businesses and private citizens. The primary solution has been trillions of dollars being injected into the economy through initiatives such as the Paycheck Protection Program, stimulus checks, and cash incentives to businesses to keep employees on the payroll. Other economic mandates such as an eviction moratorium were put in place nationwide to protect vulnerable individuals and families from losing their residences while the economy was shuttered.
As year two of this pandemic situation unfolds, additional economic agendas are being pushed through to further reduce the burdens on those government and the Biden Administration have deemed at economic risk.
On July 15th, the IRS began distributing advances on Enhanced Child Tax Credits that are part of the Biden Administration’s proposed American Rescue Plan.
According to CNBC, the IRS has begun paying out 50% of the following totals to the 88% of American families that the administration says will qualify for these increased tax credits:
The enhanced credit, a component of President Joe Biden’s American Rescue Plan (ARP), increases the existing tax benefit eligible families can receive from $2,000 up to $3,000 for kids between the ages of 6 and 17, and up to $3,600 for kids under 6.
Households must meet the following income thresholds to receive the maximum benefits, with five cents being deducted from their payments for each dollar above the set income limits:
- $75,000 for individual taxpayers
- $112,500 for heads of household
- $150,000 for married taxpayers filing jointly, and widows/widowers
Under the current guidelines, eligible households will be receiving a maximum of $1500-$1800 cash payment per qualifying dependent child and the balance of backlogged credits accrued prior to July will be awarded once families submit their taxes next year.
The Biden Administration has maintained lofty ambitions for the success of this program concerning child poverty, claiming that these tax credits in conjunction with other aspects of the American Rescue Plan would bring 5 million children out of poverty, cutting that total in half.
But while this program has been ushered in under the umbrella of Covid economic relief for Americans, it is in fact part of the core agenda Progressive lawmakers have spent years lobbying for.
As noted by VOX, the Enhanced Child Tax Credit program is just part of the economic agenda set forth in the American Rescue Plan, which also includes enshrining 12 weeks of paid family leave in federal labor laws. This paid leave would be provided to:
…new parents; caregivers for a sick family member; survivors of sexual assault, stalking, and domestic violence seeking a safe environment; and people who are ill themselves, allowing workers to recoup between 66 percent to 80 percent of their wages, capped at $4,000 a month. The program is estimated to cost approximately $225 billion across 10 years, and is among those that would be paid for via reforms like an increased tax rate for wealthier individuals.
Similar laws have been floated for years in Congress but are often blocked by Republican lawmakers citing the undue burden such programs could potentially put on small businesses. This plan would call for up to 80-90% of income for low wage earners be met while on leave.
Proponents of the legislation cite data reported by Kaiser Family Foundation, which reported that:
…women are more likely to be the ones to bear the brunt of caregiving responsibility for children or other family members, and potentially be forced out of the workforce as a result: In the past year, 30 percent of women with kids under the age of 18, compared to 20 percent of men in the same position, said they had taken time off of work because schools or day care for their children were closed due to Covid-19.
At first glance, these proposals are simple enough and will likely do good for millions of Americans in the short term. But the debate will continue between those who support these measures as humane government policy providing for the needy and those who perhaps rightly argue that these programs will only further dependence on government for a living. There is also the issue of how will the hundreds of billions that would be spent on these programs be paid for. Will the familiar trope of tax the rich be used to justify expanding government programs, or will the benefits be cancelled out by increased taxes across the board, via the tax code or indirectly through things such as inflation? No matter how these programs perform, the obvious lesson in recent government policy is that the pretense of the Covid pandemic will continue to be used to further escalate government spending and American debt with no end in sight.
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Image Credit: Photo by Sandy Millar on Unsplash