A new bipartisan proposal from Sen. Ron Wyden (D-OR) and Rep. Jason Smith (R-MO) to expand the child tax credit is a welcome effort to enact family-friendly policy and is further evidence that there is bipartisan support for pro-family policies.
The proposal would expand the child tax credit on an annual basis for the next three years. The current credit is capped at $1,600 per child, but the proposal would increase it to $1,800 for the 2023 tax year, $1,900 for 2024, and $2,000 in 2025. The bill also ties the tax credit to inflation for 2024 and 2025.
While these increases are modest, the fact that Smith and Wyden teamed up to introduce it shows that lawmakers on both sides of the partisan divide are interested in enacting economic policies that support working families.
But this proposal, while a welcome effort, should be considered the starting point for any further efforts to enact family-friendly economic policies that make it easy to raise a family on a single income.
To begin with, the brevity of the expansion is disappointing. Inflation won’t stop in 2025, and the cost of living for working families continues to skyrocket, likely rendering this increase meaningless in a few years. Tying the size of the tax credit to inflation permanently would go a long way to addressing this problem.
Congress should also look into expanding dependent tax credits to include a credit for families who choose to have one parent stay home full time.
If lawmakers wanted to go even further, they could incentivize multigenerational homes by offering bigger tax credits for families that care for elderly parents. Current law caps the dependent tax credit at $500 for adult dependents.
By incentivizing more families to care for their elderly relatives at home, Congress would also ease the funding burden for long-term medical costs currently shouldered by Medicare, as elderly relatives with close contact with family tend to live longer and healthier.
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The behaviors of families are often influenced by the economic effect that public policy has on their home lives. Putting a family-first approach to tax policy as opposed to a business-first one requires a departure from standard Washington thinking that will ultimately build stronger and more prosperous families.
Policymakers have spent decades weaving a complicated web of policies that have made it more difficult to raise a family, even as wages have increased over time. Expanding the child tax credit is a good first step toward resolving this problem.