The U.S Congress is currently reviewing a potential increase in the child tax credit. This bill, put forth by President Biden, hopes to bring financial aid to many families. Despite considerable support in the House, it’s in deadlock in the Senate.
This proposed increase is part of a more extensive financial relief package, planned to support lower and middle-class families, especially in the post-COVID-19 economy. However, disagreements on some parts of the bill have halted progress. Critics call for targeted aid, while supporters argue that the increase could alleviate child poverty.
The proposed “Child Tax Credit Act” seeks to raise the existing $2000 child tax credit to $1800 by 2023, $1900 by 2024, and $2000 by 2025, adjusting for inflation. It also plans to revive certain business deductions that were abolished during the Trump administration.
The bill has faced critique in the Senate, with some Republicans labeling it as a form of welfare. Critics express concern that the ‘look-back provision’, which allows parents to claim a larger credit based on the previous year’s income, will foster financial irresponsibility.
There are debates over the source of funding for the bill. The current proposal suggests discontinuing certain COVID-era tax relief prone to fraudulent activities. Critics argue that this could harm small businesses and individuals genuinely benefiting from it, and instead propose more thorough investigations to confront the fraud issue.
Despite these debates, there is optimism about reaching a consensus. Sen. Steve Daines quoted a policy strategist at Stifel Investment Bank, claiming the bill’s chances of passing as “marginally better than 50/50”. This shows a strong possibility that the bill will eventually pass.
Financial experts advise taxpayers not to delay their tax filings, as the IRS will manage any necessary retroactive changes if the bill passes. They also encourage citizens to remain hopeful but cautious, as the bill could significantly modify current tax laws. IRS Commissioner Danny Werfel reassured taxpayers, stating that the IRS would handle all adjustments seamlessly.
