The plan would scrap the SALT deduction and reform other tax breaks in order to provide a bigger benefit to families with children.
The plan would scrap the SALT deduction and reform other tax breaks in order to provide a bigger benefit to families with children.
O n Wednesday morning, Republican senators Mitt Romney of Utah, Steve Daines of Montana, and Richard Burr of North Carolina released a tax-reform proposal that would expand upon the child tax credit and pay for it by ending or streamlining other tax breaks.
Under their plan, the $2,000-a-year child tax credit offered under current law would become a $3,000-per-child benefit for families with children between the ages of six and 17 and a $4,200 benefit for each child under six. The benefit would be provided in monthly installments and would kick in four months before a baby’s due date.
All three senators sponsoring the plan, the Family Security Act 2.0, emphasized that it is a way to help families without adding to the deficit. “Families are the building blocks of our communities — we must ensure parents and children are receiving the support they need. Our plan will ensure family policies are working for real families, while not adding to the national debt,” said Daines, the chairman of the Senate Pro-Life Caucus, in a statement. “This framework will strengthen our commitment to help working American families grow and thrive, while also recognizing that the costs of a new baby begin even before that child is born.”
National Right to Life Committee and Susan B. Anthony Pro-Life America issued statements applauding the proposal on Wednesday, and it was formally endorsed by the Family Research Council, Democrats for Life, CatholicVote, American Principles Project, Live Action, and Feminists for Life of America, among other pro-life groups.
The increased support for families is paid for by reforming the earned-income tax credit and eliminating three other tax breaks: The “head of household” filing status, the child portion of the child-and-dependent-care credit, and the state and local tax (SALT) deduction would all be scrapped.
The SALT deduction is currently capped at $10,000 a year and generally benefits higher-income Americans, but upper-middle-class families that benefit from the SALT deduction could still be better off on net under the new Republican proposal, depending on the number of children in a family and their ages. (The child benefit would start to phase out for married couples earning $400,000.) Even so, eliminating the SALT deduction would meet stiff resistance from members of Congress in blue states (most of whom are Democrats) who are pushing to expand it instead.
Inflation is the economic issue at the forefront of voters’ minds right now, and a Romney policy adviser contended during a background call with reporters that the plan is structured so that it would not have an inflationary impact. “We’re not adding new money into the economy; we’re refashioning it in a way that works better for families,” the Romney adviser said. “We’re confident that this wouldn’t be inflationary.” The aide noted that the plan would save as much as it would spend on the child benefit in each year; it wouldn’t rely on future spending cuts to offset the cost of immediate increases in spending, a gimmick often employed in other tax-reform plans.
By incorporating a modest work requirement that wasn’t included in an earlier version of the plan introduced by Romney, the new proposal also addresses one of Democratic senator Joe Manchin’s main objections to expanding the child tax credit: The full benefit is available only to families with at least $10,000 in annual income, and is proportionally reduced for families with annual income below that threshold.
For all its selling points, there is little reason to believe this plan could pass right now, given that Democrats control Congress and eliminating the SALT deduction is a nonstarter for most Democratic members. But it could still point the way forward for a Republican Party that is increasingly concerned about — and reliant on the votes of — working-class families.
“Despite being the bedrock of our country, there’s perhaps never been a more challenging time than today to raise a family,” Romney said in a statement. “It’s no coincidence that fewer and fewer people are getting married and having children. We must do better to help families meet the challenges they face as they take on the most important work any of us will ever do — raising our society’s children. This proposal proves that we can accomplish this without adding to the deficit or creating another new federal program without any reforms. I look forward to working with my colleagues in the coming months to continue improving this plan to best meet the needs of families across the country.”