Rubio, Ivanka Trump praise pointless child tax credit expansion

The Florida senator's appeal to middle-income families simply doesn't hold up under scrutiny.

(CREDIT: AP Photo/J. Scott Applewhite)
(CREDIT: AP Photo/J. Scott Applewhite)

Ivanka Trump and Jared Kushner held a small dinner with members from both sides of the political aisle on Monday evening to discuss tax reform, one of the president’s pet projects. One of the attendees was junior Florida Sen. Marco Rubio (R), who laid out the evening’s main discussion points in a Facebook chat Tuesday morning, according to The Tampa Bay Times. Key among them: expanding the child tax credit (CTC) to appeal to working class families.

“We’re prepared to move forward with only Republicans, but ideally we would have a tax product that’s good for America that has support from members of both parties,” Rubio said, adding that there were “glimmers of hope” for his proposal to expand the credit and make it refundable — an idea he’s worked on with Utah Sen. Mike Lee (R).

“We are on the verge of achieving that, he added. “And in fact, one of the thing that’s helped us, is the reality that without a significant increase in the child tax credit, there will be no tax relief for middle class families. We have to do it at this point.”

Rubio and first daughter Trump have been working together to craft a CTC policy that they can sell to conservatives on the Hill since June, when the latter met with Republican lawmakers to discuss drafting a more parent-friendly tax proposal. In September, Trump met with conservative legislators once again during a meeting at the Americans for Tax Reform headquarters in Washington, D.C. There, she pushed for Republicans to expand the credit from its current $1,000 to at least $2,000.

Separately, Rubio and Sen. Lee have called for an expansion of up to $2,500, in addition to the current $1,000.

However, as experts have noted, expanding the CTC would still not be enough to benefit working families. Even making it refundable, as Rubio has proposed, would be a moot point.


“Simply expanding the current credit delivers only modest benefits,” The New York Times reported on Tuesday, citing analysis by the Tax Policy Center, a non-partisan think tank. As the Times explained,

That’s because the regular child tax credit is nonrefundable, which means that it’s valuable only to families with federal income tax liability. …The Tax Policy Center assumes that the regular credit is expanded by $500 to a maximum of $1,500 per child. But an even more generous expansion of the regular credit — say, tripling it to $3,000 per child — would help lower- and middle-income filers only somewhat more than under the Tax Policy Center’s assumptions.

Even making the credit refundable — or applying it to both income and payroll taxes — would only go so far toward helping lower-middle to low-income households. More importantly, it’s less likely to make the cut with the majority of Republican lawmakers.

“[Making the CTC refundable] would raise the deficit by $1.4 trillion over 10 years, on top of the already $2.5 trillion cost of the framework under the Tax Policy Center’s assumptions,” the Times noted. “So simply tacking a Rubio-Lee-style approach onto the existing framework might prove to be a deal breaker for too many in Congress without other changes.”

As it stands, the Trump/GOP tax proposal would likely hurt working families more than it helps them. Overall, as ThinkProgress previously reported, analysis by the Urban-Brookings Tax Policy Center shows that households earning more than $730,000 a year — those in the top 1 percent — would receive 53 percent of the total tax benefit. Those same households would see an after-tax income bump of around 8.5 percent, while households in the bottom 95 percent would receive a relatively meager 0.5 to 1.2 percent boost.


Additionally, the Tax Policy Center explained, by 2027, those households making between $50,000 and $150,000 a year would actually see their taxes rise.

“This is because the plan would replace personal exemptions, which are indexed for inflation, with additional credits for children and non-child dependents that are not indexed for inflation,” the organization explained. “In addition, indexing tax brackets and other parameters to the slower growing chained Consumer Price Index means that over time more income is subject to tax at higher rates.”

Democrats proposed their own tax reform strategy earlier in October, which also expands the CTC. That plan, called The Stronger Way Act and introduced by Sens. Tammy Baldwin (D-WI) and Cory Booker (D-NJ), would also make the credit refundable, but hitches the credit to inflation and increases the rate at which it is phased in.

“[This ensures] its real value is not eroded by rising household costs of food, housing, and transportation for working families,” the senators wrote.