WASHINGTON — The House passed a bill Friday that would gradually increase the popular child tax credit and make it available to more families with higher incomes.
However, millions of low-income families would lose the $1,000-a-child credit in 2018, when enhancements championed by President Barack Obama are set to expire.
The bill also aims to make a dent in illegal immigration by prohibiting people without Social Security numbers from claiming a portion of the credit reserved for low-income families.
The bill passed by a vote of 237-173.
House Republicans say the bill strengthens the tax credit by increasing it as inflation rises, and by making it available to more middle-income families.
“It is time we make some simple improvements to the child tax credit, so it keeps up with the cost of raising children,” said Rep. Dave Camp R-Mich., chairman of the tax-writing House Ways and Means Committee.
The White House threatened to veto the bill, saying it favors high-income taxpayers over the poor, while adding $90 billion to the budget deficit over the next decade.
Five million of the poorest low-income families would lose the credit in 2018, the White House said. An additional 6 million low-income families would see their tax credits reduced.
The bill “would raise taxes for millions of struggling working families while enacting expensive new tax cuts without offsetting their costs, reflecting fundamentally misplaced priorities,” the White House said.
House Republicans dispute the Democrats’ argument, saying the bill is silent on low-income families. Current law calls for the enhancement for low-income income families to expire. The bill simply lets it happen.
“The opponents make a false claim, that somehow this bill eliminates benefits for millions of low-income families,” Camp said. “That’s just wrong.”
Under current law, the child tax credit is gradually reduced and phased out for individuals making more than $75,000 a year and married couples making more than $110,000 a year.
House Republicans say the income limit for married couples amounts to a marriage penalty because it’s less than double the limit for single tax filers.
The bill would increase the income threshold for married couples to $150,000, allowing more families with higher incomes to claim it. The bill would index the income limits to inflation, meaning they would increase over time as consumer prices rise.
The amount of the credit would also increase with inflation, rising above $1,000 as consumer prices go up.
At the other end of the income spectrum, the child tax credit is also available to families that don’t make enough money to pay any federal income taxes. These families get payments similar to tax refunds when they file their tax returns.
In 2009, Obama signed a law that made the payments available to more low-income families — the poorest of the working poor. That provision, which has since been extended, is scheduled to expire at the end of 2017.
Democrats see these types of payments as an important tool to fight poverty — and as a way for low-income families to benefit from the tax code.
Some Republicans say these provisions are simply more government expenditures disguised as tax breaks.
“This is basically a benefit check handed out by the IRS,” said Rep. Sam Johnson, R-Texas.
The bill would require taxpayers claiming these payments to provide a Social Security number, making it hard for immigrants to claim them, whether they are in the country legally or not.
The requirement would save the Treasury $24.5 billion over the next decade, according to the nonpartisan Joint Committee on Taxation, which analyzes tax bills for Congress.