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Iowa families on Wednesday received what might be the final monthly check from the expanded child tax credit program.
The expanded child tax credit program began this summer with the passage of the American Rescue Plan. Families with children received an advance payment from the federal government – $300 a month for kids 5 and younger, and $250 for children aged 6 to 17. (Prior to the pandemic, families would receive funds as an annual tax reimbursement of up to $2,000 per child.)
A report by the Joint Economic Committee found that about 344,000 Iowa families received monthly payments from the program, totaling nearly $1 billion dollars distributed since July. Rep. Cindy Axne, a Democrat who has been an outspoken supporter of the monthly payments, said the funds helped families “cover their expenses, raise their children, and afford a middle class life,” in addition to fueling local economies.
“This is only a half year of those benefits — but I’m committed to making sure this is just the beginning,” Axne said. “Just imagine the impact that even one more full year of this benefit could have on Iowa’s middle class families and our economy.”
The fate of the monthly payments, however, depends on Senate negotiations over the gargantuan “Build Back Better” proposal, a $1.85 trillion spending bill that includes many Democrat policy priorities.
It’s unclear how the child tax credit program will exist in the final version of the bill.
The Washington Post reported Wednesday that Sen. Joe Manchin, a Democrat from West Virginia who plays a key role in negotiations, wanted to shrink or remove the expanded child tax credit in final negotiations on the bill. Manchin told reporters Wednesday he was “not opposed” to the child tax credit, attributing the report to “bad rumors.” (Manchin then reportedly yelled, “This is bullshit,” leaving behind the gaggle of reporters in the Capitol subway.)
Democrats need complete party support in the Senate to pass the legislation. Senate Majority Leader Charles Schumer, a New York Democrat, had set a Christmas deadline to pass the bill, but negotiations may spill over into the new year. That would likely delay January payments to families, even if the program remains intact in the final package.
Republicans oppose the spending bill altogether, arguing that the $1.85 trillion in spending over the next decade will increase inflation and the national debt.
“We see this as just feeding inflation,” said Sen. Chuck Grassley in a Wednesday call to Iowa reporters. “It’s got nothing to do with the specific programs in it.”
On the issue of the child tax credit, Grassley pointed toward the history of the program. The tax credit was first introduced in 1997, allowing parents to subtract $400 from their income taxes for each child under 17. Over time, the tax credit grew and became refundable.
Grassley said the child tax credit was important, but he objected to the monthly payment system. In an October speech, he argued the tax credit was traditionally “a work incentive” and that, by providing the monthly payments even to individuals who do not work or pay federal income tax, the Democrats had created a “poverty trap.”
“I support Iowa families, but I don’t believe a permanent government entitlement is the way to do it,” he said Wednesday.
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