On January 16, congressional leaders announced that a bipartisan agreement had been reached on a far-ranging, $78 billion tax package. The proposed legislation is not only bipartisan but bicameral: It was negotiated between Jason Smith, a Republican representative from Missouri and chairman of the House Ways and Means Committee, and Oregon Democrat Ron Wyden, who is a senator chairing the Finance Committee. If passed, the bill will be realized as the Tax Relief for American Families and Workers Act of 2024 (hereon, the Tax Relief Act).
Alongside a bevy of tax policy adjustments, the Tax Relief Act’s most significant changes include a partial reinstatement of Biden’s COVID-era expanded child tax credit — potentially easing financial burdens for millions of low-income families. The plan also stipulates an increase in the Low-Income Housing Tax Credit and more funds for disaster relief, including for the chemical spill in East Palestine, Ohio, and will be funded by ending the fraud-riddled Employee Retention Tax Credit. With Congress seemingly incapable of passing any social assistance without a lavish ritual offering to placate U.S. corporations, the legislation would also furnish businesses with an array of potentially lucrative new deductions and tax claims, potentially to the tune of hundreds of billions.
Unlike many other developed capitalist countries, the U.S. of the last four decades has grown much more confident in divesting from its children — in the face of all evidence about such investments’ outsized effects on future prosperity, for individuals and nations alike. Nevertheless, public spending on kids has declined, and continues to do so in our neoliberal times, in which the notion of state aid for the needy has become anathema.
A brief exception (that proves the rule) was the deployment of COVID aid programs: though quite modest as social democratic measures go, the pandemic assistance measures produced the largest and fastest decrease in poverty, especially child poverty, that has ever occurred in U.S. history. When those programs ended, poverty reemerged just as rapidly. (Though there is a caveat to these precise numbers, as will be described, this deterioration of social welfare has nevertheless been demonstrably severe.)
The Wyden-Smith legislation is loosely similar to Biden’s own COVID-era child tax credit increase, though the latter was considerably larger, and had other advantages, like mandating that the credit should increase month over month. The Biden policy, passed as part of 2021’s $1.9 trillion American Rescue Plan pandemic assistance bill, was wound down in 2022, returning low-income families to the previous, much less beneficent state of affairs.
A Center on Budget and Policy Priorities (CBPP) report underscored the tax credit’s load-bearing necessity, in light of the fact that poverty is again climbing in the U.S. after the expiration of the Rescue Plan; the CBPP cited census data indicating that an additional 15.3 million Americans fell below the (already artificially, misleadingly low) poverty line in 2022. This is the inevitable result of the end of COVID aid programs and a spiking cost of living. Per the Census Bureau, the rate leapt from 7.8 percent to 12.4 percent in just a year, a historic uptick.
Even if it’s not quite a systemic change, the enactment of the Wyden-Smith Tax Relief Act — if it survives the congressional floor — would at least make for a real improvement on the penurious post-Rescue Plan conditions. The CBPP projected that the act’s child tax credit increase could “lift as many as 400,000 children above........