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**APRIL 5, 2021**

Kuttner on TAP

Will Biden Make the Child Tax Credit Permanent?

****

Biden's recently enacted American Rescue Plan provides the credit for
one year. It needs to be permanent.

The tax credit is transformative. It gives all but the richest a basic
income of $3,000 per year per child under 18, topped up to $3,600 for
kids under six. This will cut the child poverty rate in half.

President Biden personally told the House Democratic Caucus, in response
to a question from Rep. Suzan DelBene of Washington state, one of the
three prime sponsors of the credit, that he favors
making it
permanent. This was confirmed

by press chief Jen Psaki, speaking to reporters on Air Force One.

However, some senior administration staffers favor extending it only
four years, to limit the cost and need for offsetting tax increases.
Biden will decide which way to go sometime in the next week, and his
decision will be reflected in his next major bill, the American Families
Plan.

A mere four-year extension would be a huge mistake. We don't know who
will be president and who will control Congress in 2025. We don't know
who will be House Speaker. The current speaker, Nancy Pelosi, has been a
powerful supporter of a large and permanent children's allowance.

The time to get this done-permanently-is now.

The credit costs about $113 billion a year. In that sense, the child tax
credit is competing with other Biden public-investment priorities that
also need to be financed by tax revenues.

Biden's first cut at a tax bill would raise some $300 billion a year
by increasing individual and corporate tax rates. But there is more
room, since Biden's plan goes only partway to restoring the tax rates
that were in effect under Obama.

There is also more revenue to be had from better tax enforcement, since
virtually all of the big-ticket tax evasion comes from the very rich.
Natasha Sarin, recently appointed as a deputy assistant secretary of the
Treasury, calculated in a paper
with Larry Summers for the National Bureau of Economic Research that
better tax compliance could bring in about $100 billion a year, roughly
the cost of the child tax credit.

Let's see-give all of America's kids a fairer start in life, or
let the richest get away with evading taxes? Bring it on!

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

Robert Kuttner's latest book is
The Stakes: 2020 and the Survival of American Democracy
.

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