Shaheen, Hassan Introduce Legislation to Expand Important Tax Credit to Put Money Back in Pockets of Workers

June 22, 2017

(Washington, DC) – U.S. Senators Jeanne Shaheen (D-NH) and Maggie Hassan (D-NH) joined 43 of their Democratic colleagues to introduce legislation to help expand two anti-poverty tax credits, helping to put money back in the pockets of working Granite Staters and families. The Working Families Tax Relief Act would expand access to and increase the value of the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), and help ensure that no worker can be taxed into poverty by the federal tax system. 

“No one who is working full time should have to worry about falling into poverty,” said Senator Shaheen. “The Working Families Tax Relief Act will provide commonsense updates to the tax code to support working families and help ensure they can provide for their families and contribute to our economy.”

“Ensuring that all Granite Staters have the support they need to get ahead and stay ahead is critical to the strength of our communities and our state’s economic well-being,” said Senator Hassan. “By expanding access to and enhancing the value of the Earned Income Tax Credit and the Child Tax Credit, this bill is a commonsense step to expand middle-class opportunity and give tax relief to hard-working Granite Staters.”

Together, the EITC and CTC help lift Americans out of poverty. The EITC is a refundable tax credit for low-income Americans that encourages work and helps families make ends meet. The CTC is available for taxpayers with children in the amount of up to $1,000 per child under age 17. In 2015, the CTC lifted 1.6 million children out of poverty.

The Working Families Tax Relief Act would do four things:

1. Expand EITC for Childless Workers: Workers who don’t claim children are the sole group that the federal tax system can tax into poverty or deeper into poverty. There is a small credit for workers not raising children in the home, but the maximum credit amount is $510 and the credit begins to phase out at $8,340 and phases out completely at $15,010. In addition, all workers that do not claim children and are younger than 25 are ineligible for the EITC. The result is that the EITC for a full-time, minimum-wage worker not claiming children is $27 – making workers who do not claim children the only group of taxpayers that can be taxed into poverty. The Working Families Tax Relief Act reduces the age limit to qualify for the EITC from 25 to 21 and expands the size of the credit so the same full-time, minimum wage worker would earn a refundable credit of approximately $913.

2. Strengthen the Child Tax Credit for Families with Young Children: The bill builds on the proven success of the CTC to lift children out of poverty. The legislation will focus on the most vulnerable children by allowing taxpayers to claim a refundable credit equal to 45 percent of each dollar earned up to a maximum credit of $3,000 per-child under six years of age.

3. Index the CTC to inflation: A recent study from Columbia University concluded that if the CTC is not indexed, 750,000 children under 17 and their families will fall below the poverty line by the end of the decade. The bill would index the maximum CTC and the income thresholds at which the credit begins to inflation.

4. Make it easier to claim the EITC: The bill includes a pair of bipartisan measures, originally proposed by the George W. Bush Administration, designed to simplify and clarify who can claim a child. The first proposal simplifies the complicated rules for how parents who are separated can claim the EITC. The second proposal allows filers who live with a qualifying child, but do not claim the child for the EITC, to claim the childless EITC proposed in the bill.