September 9, 2022

New Report Shows Romney Child Tax Credit Proposal Falls Short for Low- and Moderate-Income Families

news release

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

Washington, D.C. — With pressure mounting on 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 report from 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.

“Lawmakers should of course try to find some compromise to expand the tax credit that helps children, but it is difficult to understand why this should involve making millions of children, including low-income children, worse off than they are now,” said Steve Wamhoff, ITEP’s Director of Federal Tax Policy and a co-author of the report.

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.

“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.”