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Federal lawmakers have recently announced at least five proposals to significantly expand existing tax credits or create new ones to benefit low- and moderate-income people. While these proposals vary a great deal and take different approaches, all would primarily benefit taxpayers who received only a small share of benefits from the Tax Cuts and Jobs Act.

The Cost-of-Living Refund Act would expand the Earned Income Tax Credit (EITC) for low- and moderate-income working people. The maximum EITC would nearly double for working families with children. Working people without children would receive an EITC that is nearly six times the size of the small EITC that they are allowed under current law.

The American Family Act would expand the Child Tax Credit (CTC) for low- and middle-income families. The CTC would increase from $2,000 under current law to $3,000 for each child age six and older and to $3,600 for each child younger than age six. The proposal removes limits on the refundable part of the credit so that low- and moderate-income families with children could receive the entire credit.

The Working Families Tax Relief Act would expand the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) for low- and middle-income families.

The LIFT (Livable Incomes for Families Today) the Middle Class Act would create a new tax credit of up to $3,000 for single people and up to $6,000 for married couples, which would be an addition to existing tax credits. Eligible taxpayers would be allowed a credit equal to the maximum amount or their earnings, whichever is less. Income limits would prevent well-off households from receiving the credit.

The Rise Credit would replace the existing EITC. In most cases, the Rise Credit would be $4,000 for single people and $8,000 for married couples. Eligible taxpayers would be allowed a credit equal to the maximum amount or their earnings, whichever is less.

ITEP Research Director Carl Davis presented to the National Conference of State Legislatures (NCSL) Task Force on State and Local Taxation on approaches to cannabis taxation and the recent report Taxing Cannabis.

Comments are intended to offer some perspective on the broader tax policy context in which this proposal is being considered. We find that this proposal would help to lessen long-running inequities in Connecticut’s state and local tax law that have allowed high-income taxpayers to pay lower overall effective tax rates than most low- and middle-income families.

As of 2017, 11.5 million children in the United States were living in poverty. A national, fully-refundable Child Tax Credit (CTC) would effectively address persistently high child poverty rates at the national and state levels. The federal CTC in its current form falls short of achieving this goal due to its earnings requirement and lack of full refundability. Fortunately, states have options to make state-level improvements in the absence of federal policy change. A state-level CTC is a tool that states can employ to remedy inequalities created by the current structure of the federal CTC. State-level CTCs would significantly reduce child poverty and deep poverty in all states while also addressing racial inequities that the current system has exacerbated. This report examines the poverty impacts, costs and beneficiaries of two options for a state-level CTC.

Income inequality is a national challenge. And inadequate federal revenue is a challenge that the nation will eventually have to reckon with. This chart book makes a strong case for why federal lawmakers should seriously consider progressive revenue-raising options.