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A bipartisan group of lawmakers' plan to boost the child tax credit for parents would help 'hundreds of thousands of kids get out of poverty,' a top economic official says

CEA Chair Jared Bernstein
Chair of the Council of Economic Advisers Jared Bernstein.Kevin Dietsch/Getty Images
  • A bipartisan group of lawmakers proposed boosting the child tax credit for parents.

  • CEA Chair Jared Bernstein said the plan could lift thousands of kids out of poverty.

  • The White House told BI that Biden is committed to fighting "for the full expanded Child Tax Credit."

A bipartisan proposal to boost the child tax credit for parents appears like it might be on track to get the White House's stamp of approval.

On Tuesday, Democratic Senate Finance Chair Ron Wyden and Republican House Ways and Means Committee Chair Jason Smith announced they had reached an agreement on a tax proposal intended to provide relief to working families. Specifically, the legislation — the Tax Relief for American Families and Workers Act of 2024 — would boost the refundable child tax credit, which is limited to $1,600 per child, to $1,800 in tax year 2023, $1,900 in 2024, and $2,000 in 2025.

On Thursday, CNN's Poppy Harlow asked Jared Bernstein, chair of the White House Council of Economic Advisers, if the White House would get behind the proposal. Bernstein said President Joe Biden is "very proud of the effect of the child tax credit" from his American Rescue Plan, which both boosted the credit and made it refundable through monthly checks.

"We're very supportive of expanding the child tax credit," Bernstein said. He added that the White House would like to get the tax credit "back to where it was" in the American Rescue Plan, and that the administration hasn't seen all of the details of the bipartisan proposal.

"Interestingly, it's paid for, which is pretty important right now," Bernstein said, referring to the tax offsets in the proposal.

"So, helping hundreds of thousands of kids get out of poverty, reaching 16 million kids with a more fair child tax credit, that sounds like a really smart idea to us."

The initial beefed-up child tax credit in Biden's American Rescue Plan kept 3 million children out of poverty and fed 2 million of them in the first month of the credit, but once it expired at the end of 2021, child poverty rose. That's because families did not have the additional money from the credit to help support themselves and their children.

The proposal would also adjust the $2,000 cap for inflation in tax years 2024 and 2025, which would be rounded down to the nearest $100, according to the legislation's fact sheet. It would also allow the credit to be calculated on a per-child basis.

The left-leaning Center on Budget and Policy Priorities found that the proposal could bring 400,000 million kids above the poverty line in its first year alone, and reach 500,000 children by the time it's fully in effect. Additionally, within the first year, the expanded credit would impact 16 million children in low-income households.

White House spokesperson Michael Kikukawa told Business Insider that Biden is proud "that the expanded Child Tax Credit he fought for and signed into law cut child poverty nearly in half in 2021 and provided breathing room for tens of millions of families with children," and that the president remains committed to "fighting for the full expanded Child Tax Credit."

"We appreciate Chairman Wyden and Chairman Smith's work toward increasing the Child Tax Credit for millions of families and supporting hundreds of thousands of additional affordable homes, and look forward to reviewing the full details of their agreement," Kikukawa said.

While it's unclear at this point if the legislation has enough support to pass both chambers of Congress, some lawmakers on both sides of the aisle have said the provisions are necessary to get relief to American families.

"The deal's expansion of the Child Tax Credit will help parents keep up with the rising cost of living and ensure that their hard work pays off," Democratic Sen. Sherrod Brown said in a statement on Tuesday.

And GOP Sen. Mike Crapo told reporters on Tuesday that while he's open to "an appropriate child tax credit set of provisions," he added that "as is always the case, the devil is in the details."

Along with the child tax credit provisions, the bipartisan group of lawmakers is also proposing to expand businesses' abilities to expense research and development projects, boost disaster tax relief for families, and enhance the low-income housing tax credit.

Read the original article on Business Insider