Sen. Sherrod Brown (D-OH), along with 43 other Democratic Senators, introduced the Working Families Tax Relief Act today. If enacted, the proposal’s supporters state the bill would:
- Lift 7 million people out of poverty
- Bring 3 million children out of poverty
- Bring another 22 million people nearer to the poverty line — close to leaving poverty
- Decrease child poverty by 28 percent
- Decrease deep child poverty (defined as half the poverty line) by 40 percent
Although previous Federal tax initiatives intending to help workers excluded Puerto Rican families, Senator Brown’s proposal treats Puerto Ricans equally with other U.S. citizens.
Child Tax Credit
The current Child Tax Credit is $2,000, with $1,400 of that refundable. “Refundable” means that the credit can be paid to people who don’t owe any taxes — a significant percentage of Americans. What’s more, the refundable amount is a percentage of the household income, so families earning the least receive the least.
The new bill will make the full amount of the credit refundable for families with incomes as high as $200,000. It also includes a Young Child Tax Credit, providing an extra $1,000 per young child.
The bill also extends the Child Tax Credit fully to Puerto Rico. Currently, parents in Puerto Rico receive the tax credit only for their third child and subsequent children. Parents in states receive the credit for all their children.
In January, Rep. Jenniffer González-Colón (R-PR) introduced her own proposal to fully extend the Child Tax Credit to Puerto Rico. Upon the bill’s introduction, González-Colón, Puerto Rico’s sole representative in Congress, noted that treating Puerto Rico equally under the Federal Child Tax Credit would inject $3 billion into the economy of Puerto Rico over the next decade. The enhanced coverage would benefit 355,000 Puerto Rican families and 404,000 children, providing an average annual payment of $770 per household.
Earned Income Tax Credit
The Earned Income Tax Credit is widely credited with reducing poverty for working families. The Federal EITC is not currently available for residents of Puerto Rico. The Working Families Tax Relief Act will extend the EITC to Puerto Rico by building on the local law.
One of the problems for poor working families is that they may not initially have a higher income from work, compared with government assistance. Transportation, child care, and other costs can erase the financial benefit of low-paying jobs. The EITC offsets these costs and helps parents stick with jobs long enough to see financial benefits.
The Working Families Tax Relief Act increases the EITC, extends it to adults without children, and applies it in Puerto Rico.
The act already has broad support among Democrats in the Senate.
In 2017, Congress enacted substantial changes to the Internal Revenue Code but left Puerto Rico out of reforms that were intended to benefit working families.