New Republican Tax Plan Eliminates $11 Billion In Tax Credits For Working Families

From left to right: Sen. Orrin Hatch (R-UT) and Sen. Mitch McConnell (R-KY)

Among the many other policies it enacted, 2009’s American Recovery and Reinvestment Act (a.k.a. the stimulus) included provisions that provided over $11 billion in tax credits to low and moderate-income families. These policies were extended late last year, but the new Republican tax plan introduced by Sen. Orrin Hatch (R-UT) and Senate Minority Leader Mitch McConnell (R-KY) would allow them to expire at the end of 2012. A new report from Citizens for Tax Justice breaks down the details:

The child tax credit: The ARRA dropped the amount of income a household must earn to qualify for this credit — which provides any household as much as $1,000 per child — from $12,500 down to $3,000. The Hatch-McConnell plan would let this extension expire, jacking up the threshold to $13,300 next year. This would deny 8.9 million working families, with 16.4 million children, a total of $7.6 billion in assistance for 2013 alone.

The Earned Income Tax Credit: Most families that qualify for this credit have at least one child. The ARRA increased it specifically for families with three or more children, from 40 percent to 45 percent of their qualifying income. Above a certain level of income, the credit phases out, but the ARRA also pushed that phase-out back to a higher level for married couples. The Hatch-McConnell plan would allow both of these changes to expire as well, for a total loss of $3.4 billion for 6.5 million families with 15.9 million children.

Virtually all of the money from these tax credits go to families earning less than $50,000 a year. They provide a total of $11.1 billion to 13.1 million working families with 25.7 million children. And they would all be scrapped should the GOP tax plan go into effect.