Hillary Clinton unveiled a proposal on Tuesday that adjusts a few parameters in the tax code — but would be a huge deal for the poorest Americans.
Right now, Americans earning very little money can’t qualify for the $1,000 child tax credit. Many more have to take a smaller credit rather than the full one, because they don’t earn enough.
That’s what Clinton wants to change; she wants to make these tax credits available to families with especially low incomes, below $9,000 or even below $3,000.
Vox’s Dylan Matthews has a detailed look at the significance of this proposal. But here we’ve boiled it down to three simple cartoons. These benefits phase out for upper-middle-class and rich households, but we’re just going to look at how this impacts the lower end of incomes.
Right now, the child tax credit has a few rules
- You can only get back a maximum of 15 percent of your taxable income.
- You can only get back a maximum of $1,000.
- The first $3,000 of your taxable income doesn’t count.
This means the very poor don’t fully benefit from this tax break. In fact, if you earn less than $3,000, you don’t benefit at all. If you earn less than $9,667, you don’t get the full $1,000.
Clinton wants to change these rules and help the very poor
The child tax credit doesn’t benefit the very poor, so Clinton wants to change some of these provisions.
The first is that under her plan, you can benefit from this no matter how little money you earn. That’s because she wants the first $3,000 of your income to count toward how much you get back. Check out how this affects families. The dotted blue line is how it currently exists:
But if you have children 4 or under, Clinton wants to help you a lot more
If you have young children, Clinton wants to alter the provisions even more.
First, she wants double the amount you can receive per child under 4 years old — a maximum of $2,000 per child.
Second, she wants to let you receive a maximum of 45 percent of your income per child, which means the very poor receive a lot more money.
This puts a lot of money in the pockets of the very poor
The child tax credit didn’t start as a program to help families in poverty, as Matthews explain in his piece. Changes in the past 15 years have helped poor families benefit from the law — but the very poor were still left out.
Clinton’s proposal changes that. The Tax Policy Center calculates that this would add about $16.5 billion to the budget over 10 years, which would be about a tenth of what she wants to add to federal spending.