From the CBPP: The Impact of Medicaid Work Requirements on Children

When parents have health insurance, their children are more likely to be insured. That’s a big reason why the ACA’s expansion of Medicaid for parents significantly increased children’s health coverage, helping drive the uninsured rate for children to a historic low of 4.5 percent in 2016. But a new Trump Administration policy lets states take Medicaid coverage away from people who fail to work. This policy threatens gains in health coverage and access to care for parents and their children. Not only does Medicaid help parents of children, but it also helps schools. In a recent survey of 1,000 school superintendents, 57 percent of districts reporting said that they’d have trouble meeting special education mandates without Medicaid funding. Medicaid helps children in their families and in school. Harsh new work requirements and threats to Medicaid funding could take away this crucial support. Read: How Medicaid Work Requirements Will Harm Children   Download the PDF (2pp) Read: Medicaid Continues to Help Schools Help Children

From CBPP: Report: Strengthening Child Tax Credit Would Reduce Poverty, Improve Opportunity

Report: Strengthening Child Tax Credit Would Reduce Poverty, Improve Opportunity

April 5, 2018 at 9:45 AM

by Emily Horton

https://www.cbpp.org/blog/report-strengthening-child-tax-credit-would-reduce-poverty-improve-opportunity

A new paper released by the U.S. Partnership on Mobility from Poverty proposes improvements to the Child Tax Credit (CTC) to enable more children in low-income working families to qualify for the full credit — highlighting research on the positive effects of investing in low-income children, particularly the youngest and poorest children. Several CBPP staff are among the co-authors of the report, “Improving the Child Tax Credit for Very Low-Income Families.”
The CTC is an important income support for working families with children, worth up to $2,000 per child under age 17. But roughly 27 million children under 17 live in families that don’t earn enough to qualify for the full credit — or, in many cases, even a partial credit. For example, a single mother with two children working full time at the minimum wage is eligible for $900 per child, less than half the full credit (see chart). To get the full credit, she’d need to earn at least $30,000 a year – more than twice what a full-time, minimum-wage job pays.

Excluding the poorest children from the full CTC runs counter to a substantial body of research showing that raising the incomes of low-income children can deliver significant benefits to children’s economic mobility and opportunity later in life.
The paper’s core proposal therefore proposes several CTC improvements:

• For all families, phasing in the credit beginning with the first dollar of a family’s earnings rather than only after a family earns $2,500, as under current law.
• For all families, eliminating the $1,400-per-child cap on the amount of the credit that families can receive as a refund if their credit exceeds their federal income tax liability.
• For families with children under age 6, phasing in the credit more quickly as family earnings rise — at a rate of 50 cents per added dollar of earnings rather than the current 15 cents. As the paper explains, targeting investments in young low-income children makes sense not only because families with young children are likelier to be poor than other families, but also because the positive effects of investing in low-income children are clearest for the youngest and poorest children.

Together, these changes would make families with more than 17 million children under age 17 newly eligible for the full credit, or nearly two-thirds of the 27 million children now partially or entirely left out. The changes would also lift 1.2 million people out of poverty, including 400,000 children under age 6, and reduce the severity of poverty for many times that number. The plan would cost roughly $12 billion a year.
Lawmakers from both parties have made similar proposals. Republican Senators Marco Rubio and Mike Lee proposed the first two of these changes, while various Democratic members of Congress, including Rep. Rosa DeLauro and Senators Michael Bennet and Sherrod Brown, offered proposals similar to the third.
The paper also outlines a more ambitious proposal, which would build on the core proposal by extending the $2,000-per-child CTC to all children under age 6 in low-income families, regardless of how little a parent may earn. This broader expansion would make families with more than 19 million children under 17 newly eligible for the full credit. It would cost roughly $2 billion a year more than the core proposal.
Improving the CTC for low-income families, with a stronger credit for low-income families with young children, would also take a significant step toward ultimately allowing all low-income children, including those in families without earnings, to get the CTC’s full benefits. Various commissions and experts, including the bipartisan National Commission on Children in 1991, have recommended this change, sometimes called “full refundability.”
The full paper is here, and a summary is here.

From CBPP: Will House-Senate Conference Tilt Tax Bill Ever More Against Working Families?

DECEMBER 5, 2017 AT 10:45 AM

Low- and moderate-income working families are largely an afterthought in the House- and Senate-passed tax bills, which are heavily tilted to wealthy households and profitable corporations and add significantly to budget deficits. Addressing these fundamental flaws would effectively require the House-Senate conference committee that will iron out differences between the bills to start over and rethink the Republican approach to tax reform to this point. Since Republican leaders won’t do that, a key issue to watch is how the bill they produce complies — at least on paper — with the Senate rule requiring that the legislation can’t add to budget deficits after the first decade.

While the House didn’t try to comply with this rule, the Senate met it while making its corporate tax cuts permanent by: (1) sunsetting the tax cuts for individuals after 2025 while leaving in place various revenue-raising measures for individuals, which means that many low- and middle-income households will ultimately face tax increases; and (2) increasing the number of uninsured Americans by repealing the Affordable Care Act’s (ACA) individual mandate, which requires that most people get health coverage or pay a penalty. In other words, the Senate put the interests of corporate shareholders and other wealthy investors ahead of working families, raising taxes on millions of non-affluent Americans and leaving millions to become uninsured to finance permanent corporate tax cuts. As a matter of basic decency, policymakers should reject such an approach.

To advance their tax bill, congressional Republicans used a special legislative process known as “reconciliation” that enables a bill to pass the Senate with a bare majority, rather than the 60 votes that most legislation requires, so Republicans didn’t need a single Democratic vote. And, while GOP leaders initially promised to develop revenue-neutral tax legislation, they soon reversed course and passed a budget plan allowing tax cuts that would add an estimated $1.5 trillion to deficits over the next ten years.

They then faced the Senate’s so-called “Byrd rule,” which is designed to prevent Congress from using the reconciliation process to increase long-term budget deficits. Under this rule, a reconciliation bill can’t lose money in the years after the first decade. To comply with it, Senate Republicans chose to raise taxes on many working and middle-class families and leave 13 million people uninsured to find the funds to make permanent a big corporate tax cut and a tax exemption for multinationals’ foreign profits. Here’s what the bill does in these areas:

Permanent tax cuts for corporations. The Senate bill slashes the corporate tax rate to 20 percent from 35 and sets an even lower rate for U.S.-based multinationals’ foreign profits by adopting a “territorial” tax system, which would encourage firms to shift profits and investment offshore. As Senate Republican Ron Johnson said, “With a territorial system, there will be a real incentive to keep manufacturing overseas.” Yet Senate Republican leaders made this tax advantage for foreign profits a top priority.

Permanent tax increase for middle- and lower-income households. In revising their bill, Senate Republican leaders set all of its tax cuts for individuals to expire after 2025, as well as all of its revenue-raising measures affecting the individual income tax except one: a slower inflation measure (the chained Consumer Price Index) for adjusting tax brackets and certain tax provisions each year. This permanent change would push many taxpayers, including many middle-income taxpayers, into higher tax brackets over time.

The resulting tax increases would grow each year. By 2027, the Joint Tax Committee estimated:

• 37.8 million households with incomes below $200,000 would face tax increases, including 8.9 million facing increases of more than $500 apiece.
• 112.0 million households with incomes below $200,000 would face tax changes of less than $100 apiece.

Millions more uninsured and higher premiums in the individual market. The Senate bill would repeal the ACA’s individual mandate. This would raise the number of uninsured Americans by 13 million by 2027 and raise premiums in the individual market by an average of 10 percent, the Congressional Budget Office (CBO) estimates. Because fewer people would be insured, the CBO estimates show, federal spending for Medicaid and for federal tax credits that help low- and moderate-income Americans pay their health insurance premiums would fall by $53 billion in 2027 alone. The bill uses those savings after 2027 to help finance its permanent corporate rate cuts.

Overall, in 2027 — when only the corporate tax cuts, the slower inflation measure, and the mandate repeal would remain in place — the Senate bill would raise taxes or reduce spending for households with incomes below $75,000 by about $60 billion, while still giving very large tax cuts — through its corporate tax cuts — to those at the top, the group that owns the bulk of corporate shares and hence benefits the most from corporate tax relief. (See chart.)

 

While the House tax bill ignores the Senate rule that bars reconciliation bills from increasing budget deficits after the first decade (and, consequently, made all its provisions permanent), the bill that emerges from the conference committee will have to comply with the rule. In meeting it, conferees should reject the Senate approach of making working- and middle-class families pay for a permanent corporate rate cut and an even lower tax rate for U.S. multinationals’ foreign profits. They should not produce a bill that cuts taxes for big corporations by making working families worse off.