For Immediate Release: September 7, 2022
Contact: Kirstin Snow firstname.lastname@example.org, 215-510-9336;
For ITEP: Jon Whiten, email@example.com, 917-655-3313
New Report Shows Romney Child Tax Credit Proposal Falls Short for Low- and Moderate-Income Pennsylvanians
Nationally, Plan Would Leave 1 in 4 Children Worse Off Compared to Current Law and Help Half as Many Low-Income Children as the 2021 Expansion of the Credit
Harrisburg, PA: With pressure mounting on federal lawmakers to find a way forward for expanding the Child Tax Credit, Sen. Mitt Romney’s CTC proposal is being pushed as a possible solution — but this proposal has big downsides that would harm some of the very people this credit is designed to help, according to a new analysis by the Institute on Taxation and Economic Policy (ITEP). The new report features detailed information about how the Romney plan affects families at different income levels nationally and in each state.
Romney’s Family Security Act 2.0 would expand the Child Tax Credit but would offset the cost by cutting important tax benefits for low- and moderate-income families, particularly single-parent families.
- The Romney plan would leave one in four children — 16.4 million in total — worse off than they are under current law, including about a quarter of the very poorest children.
- It would also raise taxes for the average Black household and for two-thirds of single parent households that file taxes using “head of household” status, who are disproportionately women.
“Expanding the Child Tax Credit is the single most important thing Congress could do to fight childhood poverty in PA, but to have the greatest effect on the next generation, lawmakers need to get the details right,” said Marc Stier, Director, PA Budget and Policy Center. “Unfortunately, Sen. Romney’s proposal robs Peter to pay Paul, resulting in a mixed bag at best for many low- and moderate-income families.” The Romney plan is worse for low- and moderate-income Pennsylvanians than average:
- Nationally, 25 percent of children are in families with tax increases, including 24 percent in the poorest 20 percent of families and 47 percent in the next poorest 20 percent of families.
- In Pennsylvania, 22% percent of children are in families with tax increases, including 39% percent in the poorest 20 percent of families and 38% percent in the next poorest 20 percent of families.
The Romney plan especially falls short in comparison to the 2021 CTC expansion under the American Rescue Plan Act (ARPA), which did not limit tax benefits for any families with incomes of less than $400,000 and reduced child poverty by more than 40 percent the one year it was in effect. Continuing the ARPA expansion would provide a tax cut to nearly all low- and middle-income families with children, helping twice as many low-income children as the Romney plan.
The Romney plan also does less to reduce racial disparities, and in fact, it slightly increases taxes for the average Black family. In comparison, the ARPA expansion significantly decreases taxes for the average Black, Hispanic, and white families. Black and Hispanic families feel the strongest negative impact of the current limits on the refundable portion of the CTC — limits that the ARPA expansion would remove, and the Romney plan would replace with a different limit.
The Romney plan is also worse for single parents, mostly because it eliminates the more generous “head of household” tax filing status used by most single parents and cuts the Earned Income Tax Credit (EITC) in ways that particularly hurt single parents. The “head of household” elimination would disproportionately harm single mothers, since 70 percent of the people who file taxes this way are women. The Romney plan would likely have additional negative impacts on PA families and children that aren’t directly measured in the ITEP report. That’s because the federal tax changes under the plan would extend to the state’s tax code because it “conforms” to federal law. The Romney plan would make PA’s tax code more regressive by shrinking the federal EITC and Child and Dependent Care Credit and eliminating “head of household” filing status. That would reduce the benefit that families with children would receive under the recently enacted state add-on to the federal Child and Dependent Care Credit. Pennsylvania lawmakers could offset the reduction and elimination of these provisions by changing how their state codes conform to the federal code or by enacting and expanding their own state-level CTC.
However, when family benefits are reduced at the federal level, tax increases in the states coupled to those policies would happen automatically.
“Many pundits have pointed to Sen. Romney’s CTC proposal as a good starting point for bipartisan negotiations on expanding this critical tax credit. But as these new findings make clear, if this is where lawmakers start, they’ll have a long road to walk to get to a policy that delivers meaningful change to American families,” said ITEP Executive Director Amy Hanauer. “There’s really no need for a new starting point: the 2021 CTC expansion is just what low- and moderate-income families need, and it’s right where Congress ought to be starting its conversations.”
The Institute on Taxation and Economic Policy (ITEP) is a non-profit, non-partisan tax policy organization that conducts rigorous analyses of tax and economic proposals and provides data-driven recommendations on how to shape equitable and sustainable tax systems. ITEP’s expertise and data uniquely enhance federal, state, and local policy debates by revealing how taxes affect both public revenues and people of various levels of income.