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House Democrats to Fight Injustices With Incentives

Posted on Jan. 12, 2021

House Ways and Means Committee Democrats vowed to combat inequality through changes in the tax code by improving the earned income tax credit and the child tax credit (CTC) while also expanding credits to help working Americans.

In a legislative framework released January 11, the lawmakers said that by improving tax incentives aimed at low-income families, more can be done to help marginalized communities. “There is no silver bullet to correct the inequities that are 400 years in the making and deeply ingrained in our systems, institutions, and laws. But we cannot allow the scope of these challenges to intimidate us,” committee Chair Richard E. Neal, D-Mass., said in the foreword of the framework.

Neal has long advocated expanding the EITC and the CTC, telling reporters last year that it was a priority during his time as head of the taxwriting committee. This policy will likely find support among Democrats, including Sen. Ron Wyden of Oregon, who is expected to become the next Finance Committee chair and has been advocating similar measures in the Senate.

The framework explains that Democrats want to increase the EITC for childless workers and reduce the minimum age of eligibility from 25 to 19. There is also a push to expand the EITC to U.S. territories, such as Puerto Rico, the U.S. Virgin Islands, and Guam. The Ways and Means Committee recently added Del. Stacey E. Plaskett, D-V.I., to replace Louisiana’s Cedric L. Richmond.

Democrats also want to improve access to the CTC for Americans living in U.S. territories and to make the credit fully refundable. “A fully refundable Child Tax Credit and expanded support for child care expenses would dramatically reduce child poverty and set children up for success,” the framework says.

The framework says that to help working taxpayers, Democrats will ensure that the employee retention credit is being used properly by companies harmed by the COVID-19 pandemic. The credit, created by the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136), provides employers with an incentive to keep workers on the payroll during the pandemic.  

Democrats also say they want to extend the work opportunity tax credit, which provides employers with a credit if they hire from a list of disadvantaged groups. The framework doesn't indicate whether the credit would be extended beyond 2025 — when it is scheduled to expire — or made permanent.

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