The Senate to Vote on the Tax Cuts and Jobs Act

The Senate is poised to vote on its version of the Tax Cuts and Jobs Act this week. Though the Senate bill varies significantly and its from its counterpart in the House (which passed in spite of fifteen harmful provisions to kids and families on November 16), the measure will still dramatically overhaul the existing tax code. The Senate bill’s writers claim that it will provide meaningful tax relief to millions of families. However, initial analysis of the bill suggests that the bulk of its tax breaks flow to wealthy families and corporations in the long term. For middle and low income families, especially those in poverty, modest tax relief is temporary—and it comes at a steep price.

Nine Provisions in the Senate Bill That Hurt Children:

1. Increase to the Deficit will force Spending Cuts: The tax bill would increase the federal deficit by 1.49 trillion dollars over the next decade. According to the Tax Policy Center, these tax cuts will have to be paid for somehow over the long term—probably with some combination of increases in other taxes or cuts in spending. Meanwhile, the bill’s writers have signaled that though some 35 components of the Senate bill are set to expire in eight years, they expect that they would be extended—which would put the bill’s actual long-term cost at far above 1.49 trillion.

How it hurts kids: Programs that support kids and families—like food assistance, Medicaid, housing, and education investments—could all be at risk.

1. Deficit Spending Now Hurts Children Later: As Maya MacGuineas of the Committee for a Responsible Federal Budget explains, past tax cuts have failed to spark economic growth dollar for dollar—generally leading to larger budget deficits and lower revenue. This is bad for the economy: debt not only suppresses economic growth, it suppresses future wages. The Congressional Budget Office estimates that average income in 30 years will be $5,000 less a year if the national debt continues to grow on its current trajectory.

How it hurts kids: by suppressing future economic growth and earnings, children will pay the high price of the tax bill’s $1.49 trillion addition to the national debt.

1. Forces Another Tax Fight in Eight Years: The Senate Tax Bill does promise a tax break for most families at every income level in its first few years. However, to avoid violating the Senate’s requirement that the bill not increase the deficit by more than $1.5 trillion over ten years, most of the provisions that provide tax relief to children and families—such as the reduced rates and expanded child tax credit—are set to expire in eight years. Furthermore, the largest share of this temporary tax relief is directed to the wealthiest families, as the Tax Policy Center illustrates.

How it hurts kids: While the bill’s writers are confident that these provisions would be extended due to their popularity, there are no guarantees. As a result, the expiration date creates uncertainty in the tax code. Even worse, it will force kids and families to fight to retain their tax breaks at the expense of a massive deficit increase.

1. Using the Chained Consumer Price Index (CPI) will Increase Tax Burden: One technical, but quite consequential, change in the tax bill is its replacement of the current measure of inflation—the CPI—to the Chained-CPI. The Chained-CPI is a less generous measure of inflation—and thus it understates the role that inflation plays in increasing incomes. Using this measure to determine tax bracket would, the Tax Foundation explains, place families into higher tax brackets when they don’t deserve to be there. At the same time, tax deductions that are linked to the chained CPI (such as the Earned Income Tax Credit and Standard Deduction) wouldn’t grow as quickly.

How it hurts kids: Not only would families find their tax burden increased substantially over time due to this “bracket creep,” says Howard Gleckman, but low-and-moderate income families would also see the value of their tax deductions eroded over time.

1. Strips the Child Tax Credit (CTC) from Over One Million Children: Currently, immigrant parents who file their taxes with an Individual Taxpayer Identification Number (ITIN) can claim the CTC on behalf of qualifying children. The Senate tax bill would change the eligibility rules so that only children with a social security number are eligible for the entire child tax credit. This provision targets over one million immigrant children who lack social security numbers, many of whom are among the Child Tax Credit’s most economically vulnerable recipients, according to the Center for Law and Social Policy. It could also add a barrier to accessing the Child Tax Credit for families with newborns or adopted children if they experience unexpected delays in receiving a social security number.

How it hurts kids: Over one million immigrant children would lose the Child Tax Credit, with possible effects on families with newborns and adopted children experiencing delays in receiving social security numbers for their children.

1. Removes the Personal Exemption for Five Years: The current tax code allows families a tax exemption of $4,050 per person ($4150 in 2018.) Even with the tax bill’s increase of the standard deduction to $18,000 for head of household filers and $24,000 for married joint filers, larger families (single parents with three or more children, married parents with two or more children) would see their taxable income increase, which prevents some from benefiting fully from the bill’s expansion of the child tax credit. Furthermore, large families whose children are in college and are too old to receive the credit would not be able to make up for the loss of the personal exemption with the child tax credit.

How it hurts kids: Removing the personal exemption could penalize larger families, especially those with children in college

1. Repeals The Entire State and Local Tax (SALT) Deduction: The Senate Tax Bill ends the federal deduction for state and local income, sales, and property taxes. According to the Government Finance Officers Association, the loss of this deduction would likely force states to lower their tax rates to reduce the additional tax burden it would place on residents.

How it hurts kids: Lower state and local taxes would make it harder for states — many of which already face serious budget strains — to raise sufficient revenues in the coming years to invest in K-12 education and child welfare services, both of which rely heavily on state and local funding. The Senate’s positive step to increase the educator expense deduction—a move that would double the current $250 deduction available to teachers who self-supply classroom supplies—will not be enough to counteract the loss that schools will face due to diminished state and local funding streams.

1. Diminishes the “Orphan Drug” Tax Credit (ODTC): The ODTC allows drug manufacturers to claim a tax credit of 50 percent of the qualified costs of clinical research and drug testing of orphan drugs, which treat rare diseases. Unlike the House, which sought to repeal the credit entirely, the Senate bill makes a series of changes that, according to The National Organization for Rare Disorders, cut the incentive in half, could limit those who qualify, and may interrupt current clinical trials.

How it hurts kids: Even though children comprise only 23 percent of the US population, they represent 50 percent of the Americans suffering from the rare diseases that “orphan drugs” treat, and The American Academy of Pediatrics argues that this credit has spurred the development of drugs specifically targeting children with rare diseases in the past decade—meaning kids with rare diseases will suffer disproportionately if it is weakened.

1. Repeals the Affordable Care Act’s Individual Mandate: Another controversial provision in the Senate tax bill is the repeal of the Affordable Care Act’s penalty for individuals who can afford insurance but opt not to purchase it. The mandate is an important measure for keeping healthy individuals in the insurance marketplace, which keeps premiums affordable. The Congressional Budget Office estimates that without the mandate, thirteen million fewer people will access health insurance within ten years.

How it hurts kids: The repeal of the Mandate means some families will no longer opt to purchase health insurance through the Marketplace—meaning they also would no longer receive government subsidies to purchase insurance. The Joint Committee on Taxation scores the loss of the subsidies as a net tax increase starting in 2027 for families earning less than $75,000 (half of all US households would also see a tax increase in that same year independent of the mandate repeal). Furthermore, undermining the insurance market could drive the cost of premiums up by 10 percent in 2019, hurting families who remain in the individual marketplace, and would likely also lead to 5 million fewer participants in Medicaid. The Congressional Budget Office estimates that as a result, the federal government would spend less money on the poorest individuals—those earning less than $30,000 a year—as early as 2019.

Three Pieces of the Senate Bill Have Potential to Work Better for Kids:

The Senate tax bill is flawed, but it has at least two policy provisions that could be improved upon to better benefit kids and families:

1. Make the Child Tax Credit (CTC) Increase Permanent and Refundable at the First Dollar: The Senate bill increases the current CTC from $1,000 to $2,000, shifts the earnings threshold for receiving the credit from $3,000 to $2,500, increases the phase-out threshold to $500,000. The expansion is a marked improvement over current law for some families, but not those who are working-class or living in poverty, argues Senator Marco Rubio. Because the increase is not refundable, it won’t apply to families living under the poverty threshold—the very ones who would benefit most from the additional income. Though the bill indexes the refundable portion of the credit to the chained-CPI, it would take decades for it to experience a commensurate increase to the non-refundable portion. Meanwhile, the Senate’s changes to the earnings thresholds showcase skewed priorities. Those earning less than $10,000 a year would receive what the Center on Budget and Policy Priorities calls a “token” CTC increase of $75—while someone making $500,000 would now qualify for a full $2,000 credit per child.

How it could work better for kids: Instead of increasing the phase-out level, which disproportionately favors wealthy families, the bill should instead make the entire $1,000 Child Tax Credit increase refundable, starting at the taxpayer’s first dollar of earnings. Not only would this better target the credit to those who need assistance the most, but estimates from the Century Foundation suggest that it would increase the cost of the Child Tax Credit by less then $59 billion a year—cheaper than the Senate’s current proposal, which is estimated to cost an average of roughly $68 billion a year.  

1. Pursue a More Comprehensive Paid Leave Program: The Senate bill also creates a two-year pilot program for a paid leave tax credit. The credit would apply to businesses offering full-time employees who earn less than $72,000 a year at least two weeks of paid family and medical leave each year. To receive the credit, employers must pay a minimum of 50 percent of wages, for which they receive a 12.5 percent credit that increases by .25 percent for every additional percentage point of wage replacement. However, the credit maxes out at 25 percent, and it can go to companies already implementing paid leave policies. Aparna Mathur with the American Enterprise Institute points out that on the whole, the credit may not be enough to make paid leave affordable for companies who don’t currently provide it—and thus, may fail to meaningfully expand access to this vital support.

How it could work better for kids: While it is encouraging that lawmakers are attempting to incentivize increased access to paid leave programs, modest employer tax credits are unlikely to spark the kind of comprehensive paid leave that would benefit low-earning families. Lawmakers looking to create equitable access to paid leave should embrace plans like the FAMILY Act (sponsored by Congresswoman DeLauro (D-CT) and Senator Kirsten Gillibrand (D-NY) which would combine employer and employee payroll contributions to create a shared fund for affordable and adequate paid leave for employers of all sizes.

1. Embrace Potential Amendments to Improve the Child and Dependent Care Credit (CDCTC): The Senate bill does not make any changes to the CDCTC, but several options exist for strengthening and expanding access to this credit. Several lawmakers support the PACE Act (sponsored by Senators Burr R-NC, and King-I, ME) and may introduce it as an amendment to the tax bill when it is on the Senate floor.

How it could work better for kids: The PACE Act would increase the value of the CDCTC, make it refundbale, and index it to inflation. Lawmakers should take the opportunity to support targeted improvements to the CDCTC to help families mitigate the skyrocketing cost of childcare.

The Bottom Line: This Tax Code Overhaul Doesn’t Invest in Children

We urge lawmakers to pursue bipartisan tax reform that prioritizes moderate and low-income families in the long term, without jeopardizing government spending that provides crucial supports for children.

Recently, the House of Representatives passed its tax bill to dramatically overhaul the existing tax code with a 227 to 205 vote. The bill’s supporters claim that the Tax Cuts and Jobs Act (H.R. 1) will provide meaningful tax relief to millions of families. However, initial analysis of suggests that for families with children—especially those who are low-income—this is not the case. In fact, First Focus Campaign for Children has identified fifteen provisions that harm kids and families.

Fifteen pieces of the Tax Bill that Hurt Children:

1. Increase to the Deficit will force Spending Cuts: The tax bill would increase the federal deficit by 1.49 trillion dollars over the next decade. According to the Tax Policy Center, these tax cuts will have to be paid for somehow over the long term—probably with some combination of increases in other taxes or cuts in spending.

How it hurts kids: Programs that support kids and families—like food assistance, Medicaid, housing, and education investments—could all be at risk.

2. Deficit Spending Now Hurts Children Later: As Maya MacGuineas of the Committee for a Responsible Federal Budget explains, past tax cuts have failed to spark economic growth dollar for dollar—generally leading to larger budget deficits and lower revenue. This is bad for the economy: debt not only suppresses economic growth, it suppresses future wages. The Congressional Budget Office estimates that average income in 30 years will be $5,000 less a year if the national debt continues to grow on its current trajectory.

How it hurts kids: by suppressing future economic growth and earnings, children will pay the high price of the tax bill’s $1.49 trillion addition to the national debt.

3. Using the Chained Consumer Price Index (CPI) will Increase Tax Burden: One technical, but quite consequential, change in the tax bill is its replacement of the current measure of inflation—the CPI—to the Chained-CPI. The Chained-CPI is a less generous measure of inflation—and thus it understates the role that inflation plays in increasing incomes. Using this measure to determine tax bracket would, the Tax Foundation explains, place families into higher tax brackets when they don’t deserve to be there. At the same time, tax deductions that are linked to the chained CPI (such as the Earned Income Tax Credit and Standard Deduction) wouldn’t grow as quickly.

How it hurts kids: Not only would families find their tax burden increased substantially over time due to this “bracket creep,” says Howard Gleckman, but low-and-moderate income families would also see the value of their tax deductions eroded over time.

4. Insufficiently Increases the Child Tax Credit: The tax bill increases the current Child Tax Credit from $1,000 to $1,600, with an additional $300 credit per parent. The addition of the Family Credit is a marginal improvement over current law, but not for families with children who are working-class or living in poverty, argues Senator Marco Rubio. Because the increases are not refundable, they won’t apply to families living under the poverty threshold, and the $300 parent credits would expire after five years. The proposal to index the refundable portion to inflation is also insufficient, as it uses a less generous estimate and ceases upon reaching $1600.

How it hurts kids: This Child Tax Credit will not only fail to reach children in living in poverty, but its relief for working families will likely be temporary—the Joint Committee on Taxation estimates that many families earning between $20,000 and $40,000 will actually see their tax liability increase after 2023.

5. Strips the Child Tax Credit from millions of children with immigrant parents: The tax bill would require at least one immigrant parent to have a Social Security Number to claim the refundable portion (the first $1000) of the Child Tax Credit. Currently, immigrant parents who file their taxes with an Individual Taxpayer Identification Number (ITIN) can claim the CTC on behalf of qualifying children. This provision targets the 5 million children in mixed-status families—many of whom are among the Child Tax Credit’s most economically vulnerable recipients, according to the Center for Law and Social Policy.

How it hurts kids: Over 5 million children, 80 percent of whom are US citizens, and many of whom are economically vulnerable, would lose the Child Tax Credit.

6. Removes the Personal Exemption: The current tax code allows families a tax exemption of $4,050 per person. For some families, the loss of the personal exemption is recovered through the tax bill’s increase of the standard deduction to $18,300 for head of household filers and $24,000 for married joint filers. However, because under current law the standar deduction and personal excemption can be combined, under the new code, single parents with two or more children and married couples with one or more child could see their taxable income increase before applying other deductions, especially once the additional family credit expires.

How it hurts kids: Removing the personal exemption penalizes families with children, whether they are single or married, especially once other family credits expire.

7. Repeals Most of the State and Local Tax (SALT) Deduction: The Tax Bill ends the federal deduction for state and local income and sales taxes and limits the deduction for state and local property taxes to taxes under $10,000. According to the Government Finance Officers Association, the loss of this deduction would likely force states to lower their tax rates to reduce the additional tax burden it would place on residents.

How it hurts kids: Lower state and local taxes would make it harder for states — many of which already face serious budget strains — to raise sufficient revenues in the coming years to invest in K-12 education and child welfare services, both of which rely heavily on state and local funding.

8. Repeals the Educator Expense Deduction: Teachers, who already earn meager salaries, spend hundreds of dollars of their own money each year on classroom supplies to compensate for limited school budgets. The tax bill repeals a current provision that allows them to deduct up to $250 of this spending.

How it hurts kids: Teachers will essentially have fewer dollars to purchase school supplies—meaning children may have less access to the resources they need for a high-quality education.

9. Consolidates Educational Savings Accounts: The tax bill proposes to end Coverdell Education Savings Accounts — income restricted tax-free accounts that allow families to set aside up to $2,000 to cover K-12 costs. At the same time, the bill would expand 529 college savings accounts (which are open to everyone) to cover K-12 expenses of up to $10,000 per year at public, private and religious schools.

How it hurts kids: Ending Coverdell accounts while expanding 529’s to include K-12 tuition would effectively incentivize wealthy Americans to put away money for private school—further limiting the resources available to public schools.

10. Repeals Student Loan interest Deduction: The GOP plan would no longer allow people repaying federal and private student loans to reduce their tax burden by up to $2,500. Because the current deduction is “above-the-line,” it primarily benefits low-income families who do not itemize deductions on their tax returns and students with higher loan balances.

How it hurts kids: The repeal of student loan deductions would make higher education less affordable for low-income students, as well as foster-youth who often have to take out private student loans to pay for college.

11. Repeals other Tax Breaks for Higher Education: The tax plan would also repeal two higher education credits—the Lifetime Learning Credit and the Hope Scholarship Credit. The Lifetime Learning Credit is a flexible credit of up to $2,000 for the first $10,000 spent on education expenses. The bill would preserve the American Opportunity Tax Credit, which is worth up to $2,500 per year, and partially extends it into a fifth year. The changes are projected to reduce tuition assistance by $17.5 billion over ten years, directly impacting the ability of families to defray the costs associated with higher education.

How it hurts kids: According to former undersecretary of education Ted Mitchell, the repeal of these credits would discourage participation in postsecondary education, while making it more expensive for those who do enroll. 

12. Eliminates the Dependent Care Assistance Program (DCAP): The tax bill eliminates DCAP, an employer-sponsored provision by which working parents can put up to $5,000 (or $2,500 for single parents) of pre-tax money in a flexible savings account (FSA) to count towards annual child care costs, including the cost of a nanny, babysitter, day-care center or preschool, as well as before and after school care.

How it hurts kids: While DCAP can (and should) be strengthened, its repeal will only further limit the options available to working parents struggling to afford the skyrocketing costs of high-quality care for their children.

13. Eliminates the Employer-Provided Child Care Credit: The bill also repeals a nonrefundable credit that employers may claim up to $150,000 or 25 percent expenses related to providing or contracting to provide child care for employees, as well as 10 percent of expenses related to child care resource and referral services for their employees.

How it hurts kids: Repealing the credit is a disincentive for businesses to invest in the process of making childcare affordable and accessible to employees, limiting the options available to working parents struggling to afford high-quality care for their children.

14. Eliminates Extraordinary Medical Expense Deduction: Under the bill, families will no longer be able to deduct medical expenses that exceed ten percent of their income. Half of the households who claim the medical expense deduction earn $50,000 or less a year. The deduction applies to a wide range of medical expenses not covered by insurance, including remedial reading lessons for a dyslexic child, travel expenses to visit a child in rehabilitation, therapies of various kinds, prosthetics, high-cost drugs, and even home improvements that make the residence more accessible.

How it hurts kids: The Center for American Progress highlights that this deduction is critical for middle-class and low-income families with special needs and/or chronically ill children, who could now lose access to the full range of care they require.

15. Repeals the “Orphan Drug” Tax Credit (ODTC): The ODTC allows drug manufacturers to claim a tax credit of 50 percent of the qualified costs of clinical research and drug testing of orphan drugs, which treat rare diseases. The National Organization for Rare Disorders claims its repeal could lead to a 33 percent decrease in the development of life-saving treatments.

How it hurts kids: Even though children comprise only 23 percent of the US population, they represent 50 percent of the Americans suffering from the rare diseases that “orphan drugs” treat, and The American Academy of Pediatrics argues that this credit has spurred the development of drugs specifically targeting children with rare diseases in the past decade—meaning kids with rare diseases will suffer disproportionately from its repeal.

The Bottom Line: This Tax Code Overhaul Doesn’t Invest in Children

While not definitive, the above list is an important reminder that the bill that just passed the House—with support from 227 lawmakers—does much more than cut tax rates. Provisions that appear to benefit families in isolation aren’t happening in a vacuum, and thus could have long-lasting consequences. Meanwhile, many of the choices made in the name of “simplification” will be a direct hit on important supports for children and families in the tax code. Altogether, this long list of provisions suggests that families are not the priority in the House’s tax overhaul.

WASHINGTON--The First Focus Campaign for Children applauds the introduction of the American Family Act of 2017, which would expand the Child Tax Credit to more effectively target low-income families and thereby reduce child poverty.

Introduced by Senators Michael Bennet (D-CO) and Sherrod Brown (D-OH), the proposal would triple the maximum value of the Child Tax Credit to $3,000 per child ($3,600 for children under six), index the credit to inflation, and for the first time, make it fully refundable.  The bill would also distribute the CTC as a monthly $250 credit ($350 for children under six), giving families support throughout the year to address monthly expenses rather than forcing them to wait for an annual lump sum.

Unlike last month’s flawed “Big Six” tax Framework, which targets an expansion of the Child Tax Credit to middle class and wealthy families, Bennett and Brown’s proposal would target families with the greatest need and provide critical support for families with children who are struggling to get by.

First Focus Campaign for Children President Bruce Lesley said:

“We enthusiastically support this proposal from Senators Brown and Bennett, two tireless champions for children on Capitol Hill.

We know that increasing household income leads to improvements in child development and educational attainment. The American Family Act of 2017 would go a long way in improving outcomes for our nation’s children.

Researchers at Columbia University estimate the Senators’ proposal could reduce the share of children in poverty by a whopping 45 percent. Lawmakers who are serious about making children and families a priority should embrace this proposal, especially if they are concerned about the effects of child poverty on our nation’s economic future.”

FOR IMMEDIATE RELEASE: March 7, 2017

(Washington, D.C.) – In response to the release of the American Health Care Act by Republican leadership in the House of Representatives last evening, a bill that would repeal major provisions of the Affordable Care Act (ACA) and impose a per capita cap on the Medicaid program, First Focus Campaign for Children (FFCC) releases the following statement by President Bruce Lesley:

The American Health Care Act would, as currently written, be a major step backwards for our nation’s children. The uninsured rate for children reached a record low of 4.8 percent in 2015 and has dropped by 68 percent since passage of the Children’s Health Insurance Program two decades ago. As a nation, we have made enormous progress in terms of ensuring our nation’s children have health insurance coverage. Now is not the time to reverse this progress; the American Health Care Act would seriously threaten the health and well-being of millions of children.

First and foremost, FFCC strongly opposes the provisions in the bill that impose a per capita cap upon the Medicaid program, which currently provides coverage to an estimated 35 million low-income children in this country. Per capita caps are nothing more than arbitrary limits imposed upon states by the federal government that, by definition, shortchange states for the costs associated with care for children with special health care needs, such as children with cancer, spina bifida, cystic fibrosis, asthma, and sickle cell anemia, or other higher-cost populations such as newborns and children in foster care. It is the care to these vulnerable groups of children that could be threatened and rationed by the federal imposition of a per capita cap on states.

In fact, since the entire purpose of a per capita cap is to cut federal support to Medicaid, states may be forced to either finance any shortfall themselves or implement various forms of rationing, such as making cuts in coverage, benefits, and payment rates to provides, shifting more costs to low-income families, or limiting access to care for children, pregnant women, adults, people with disabilities, and senior citizens. This could be an outright disaster for millions of our nation’s most vulnerable citizens.

Although the American Health Care Act retains the provision in the ACA that allows children to stay on their parents’ health care to age 26, which we support, it phases out parallel language that allows children in foster care to retain their Medicaid coverage to age 26 through presumptive eligibility. Children aging out of foster care are some of our nation’s most vulnerable young adults with health care needs associated with their childhood trauma that threaten their well-being. Now is not the time to impose greater administrative burdens and delays on their health coverage, while also underfinancing the care of all children in–and who have aged out of–foster care through the Medicaid per capita cap.

These provisions also violate a campaign promise by President Donald Trump to not cut the Medicaid program and to ensure that no one would lose health coverage under the bill.

As for the changes made by repealing the tax subsidies in the ACA and replacing them with a different set of tax credits in the individual market, FFCC is concerned that such changes may leave children with special health care needs particularly vulnerable. Unfortunately, the legislation currently does not include a much-needed score by the Congressional Budget Office (CBO) along with an analysis of how the bill might impact existing coverage.

Congress should commit to “do no harm” to the health insurance coverage upon which our nation’s children rely. Since this bill threatens to do real harm to Medicaid coverage that an estimated 35 million count on for their care, we urge Congress to return to the drawing board, schedule congressional hearings to discuss and receiving input on health care reform proposals, allow Members of Congress and the public ample time to read and study the legislation, and wait until the CBO does its job in providing a score and analysis of how the bill would impact coverage rates and our nation’s health care system. Children deserve better than to have adults in Congress threaten their health coverage.

H.R. 4722 would deny millions children access to the refundable portion of the Child Tax Credit (CTC).

Currently, immigrant parents who are ineligible for a Social Security Number (SSN) pay their taxes using an Individual Identification Number, and are able to claim the CTC and its refundable portion for qualifying children. By requiring a SSN, more than 5 million children living in low-income immigrant families, the vast majority of whom are U.S. Citizens, would be directly harmed.

The CTC and the ACTC were designed to benefit children, and we are opposed to any change in eligibility that would undermine the best interest of children.

Washington – The end-of-year spending bill and tax package released by Congress today calls for permanently extending the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), effectively helping millions of America’s children and families from falling deeper into poverty.

Studies have showed that combined, the EITC and CTC expand children’s opportunities to be healthier, perform better in school, and have higher earnings in adulthood. The credits are a critical support to help families offset the cost of raising children.

“We applaud Congress for coming together in the best interest of children and making the EITC and CTC permanent,” said Bruce Lesley, President of First Focus Campaign for Children. “Working families need and deserve opportunities to succeed, and today Congress and the White House came together to agree to extend these important federal family tax provisions.”

While the family tax credits benefit the majority of working families, proposed eligibility changes in the new package are concerning, specifically because they prevent some individuals who are issued new Social Security numbers from being able to make retroactive EITC claims. Also troubling is a provision that would make it more difficult for immigrant parents to obtain an Individual Taxpayer Identification Number (ITIN) to pay their taxes, an additional barrier that singles out working immigrant families.

“Children of immigrants comprise more than 30 percent of all children in low-income families in America, and it’s critical that Congress makes decisions based on the best interest of all of America’s children,” Lesley said.

Studying the Cost of Child Poverty

Included in the omnibus spending bill is a provision that requests the National Academy of Sciences (NAS) to provide an evidence-based, non-partisan holistic analysis of the cost of child poverty, and make recommendations to Congress to reduce the number of children living in poverty by half in 10 years.

First Focus Campaign for Children has worked diligently with lawmakers in both chambers in support of the NAS study. The study is also a critical component of the Child Poverty Reduction Act, which would establish a national goal of eradicating child poverty in 20 years.

“We’re pleased to see that policymakers on both sides of the aisle are supportive of this practical, first step toward ending child poverty for our children and families,” Lesley said. “We’re especially thankful of the leadership of Reps. Lucille Roybal-Allard and Barbara Lee, who championed this effort.”

Strengthening the Pillars of Education

Today’s spending package increases discretionary spending in education by $1.171 billion, including a $500 million increase in Title I allocations and a $4.958 million increase for programs targeting the education of homeless children and youth. The increase in spending still falls under the provisions of No Child Left Behind, as new education provisions under the new Every Student Succeeds Act are not scheduled to take effect until the 2017-18 school year.

“There are more than 1.3 million homeless children and youth in America’s schools today,” Lesley said. “Homeless children and youth face unique barriers to academic success, and we’re grateful that this funding will help the kids who need it most. For many children without homes, school is their life.”

Additional spending provisions that strengthen children’s education include an important funding increase for Head Start and the Child Care and Development Block Grants – by $570 million and $326 million, respectively – and reauthorized funding for Preschool Development Grants. These bipartisan investments are an important commitment to early childhood programs that support and nurture the youngest children during their most important stages of development.

“These programs yield short- and long-term benefits to children’s health, educational achievement, and future success, all to the benefit of our national prosperity,” Lesley said.

Protecting Family Health Plans

The tax extenders package places a two-year hold on the “Cadillac Tax,” a provision of the Affordable Care Act that was intended to rein in high-priced employee-offered policies but instead, disproportionately harms kids’ coverage. The tax incents employers to begin increasing health care costs to families who are already struggling.

The two-year delay will allow working families to avoid higher costs and reduced benefits when it comes to employee-sponsored healthcare.

“Although this is a well-intended effort on the part of the Administration and lawmakers, the reality is that the Cadillac Tax disproportionately harms dependent coverage for children, and we’re pleased to see there is broad, bipartisan support to delay or repeal it,” Lesley said.

Keeping Tobacco out of the Hands of Children

Lawmakers protected the health of children and teenagers by rejecting a proposed policy rider that would have shielded electronic cigarette manufacturers from the standard FDA approval process.

A new generation of smokers is becoming addicted to nicotine. The Centers for Disease and Control Prevention reported that e-cigarette use among middle- and high-school students tripled in one year, and a recent Harvard study has linked the flavoring contained in e-cigarette vapor to a condition called “Popcorn Lung.”

Moreover, e-cigarette retailers have aggressively marketed their products to children, by naming and branding e-cigarettes as popular children’s candy and cereal brands.

“We’re optimistic that Congress will do even more to protect children from these dangerous and deceitful marketing practices,” Lesley said. “For example, the Child Nicotine Poisoning Prevention Act would require child safety packaging for all liquid nicotine containers.”

Better Nutrition for Kids

Child nutrition standards prevailed in the omnibus package by excluding riders that would have undermined them, as previously proposed.

The spending bill also provides $6.35 billion for WIC to fully fund participation of low-income pregnant, breast feeding, and postpartum women as well as infants and children up to age five, and summer Electronic Benefit Demonstration grants will receive $23 million to provide families of low-income children access to food during the summer months when school is out.

“This compromise isn’t perfect, but it’s good for children, good for families, and offers a hopeful glimpse into a more cooperative environment in Congress where America’s children have a better seat at the negotiating table,” Lesley said.

Download the First Focus Omnibus and Tax Agreement Fact Sheet. 

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The First Focus Campaign for Children is a 501(c)(4) nonprofit organization affiliated with First Focus, a bipartisan children’s advocacy organization. The Campaign for Children advocates directly for legislative change in Congress to ensure children and families are a priority in federal policy and budget decisions. For more information, visit www.campaignforchildren.org.

This Foster EITC Act, introduced by Senators Bob Casey (D-PA), Patty Murray (D-WA), and Elizabeth Warren (D-MA), would help youth formerly in care by lowering the age that former foster youth could claim the EITC from 25 to 18, among other things. This would help youth who exit care and on their own – often these youth have earned income but are still struggling to make ends meet. By allowing youth formerly in care to claim the credit during the time they are transitioning to adulthood, it helps to create parity with young adults of the same age that often receive familial support.

First Focus Campaign for Children sent this letter to the U.S. Senate Committee on Finance and the U.S. House Committee on Ways and Means to make important improvements to Earned Income Tax Credit, Child Tax Credit, and the Child and Dependent Care Tax Credit.

Washington – First Focus Campaign for Children today applauded the introduction of a U.S. Senate bill that would expand eligibility of the earned income tax credit (EITC) for former foster youth.

The Foster EITC Act, introduced today by Sens. Bob Casey (D-PA), Patty Murray (D-WA), and Elizabeth Warren (D-MA), would lower the age that former foster youth can claim the EITC from 25 to 18. Among other things, the bill would also expand eligibility to all childless adults over age 21.

The EITC is a tax credit for low-and moderate-income working individuals and families. It is one the largest federal anti-poverty programs and lifted 10 million Americans out of poverty in 2013.

Former foster youth earn between half and a quarter of the earnings of their peers at age 24. Most are not living with a biological or foster parent, and often lack the family financial support that many other young adults receive. Allowing youth formerly in care to claim the credit during the time they are transitioning to adulthood creates parity with young adults of the same age.

First Focus Campaign for Children Bruce Lesley made the following statement in support of the legislation:

“We applaud the leadership of Senators Casey, Murray, and Warren in serving former foster youth by expanding their eligibility for the lifechanging Earned Income Tax Credit. Young adults formerly in foster care earn as little as half that of their peers, and this bill would even the playing field. It’s just common sense that we should help secure a bright future for America’s most vulnerable youth and lead them towards economic security.”

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The First Focus Campaign for Children is a 501(c)(4) nonprofit organization affiliated with First Focus, a bipartisan children’s advocacy organization. The Campaign for Children advocates directly for legislative change in Congress to ensure children and families are the priority in federal policy and budget decisions. For more information, visit www.campaignforchildren.org.

The First Focus Campaign for Children supports legislators who stand by our nation’s children. This ad recognizing our 2015 Champions for Children and Defenders of Children ran in the October 27, 2015 edition of Roll Call.