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Marco Rubio got a last-minute tax deal — but the poorest Americans got left out

The final big Republican tax deal, explained.

Tasos Katopodis/Getty Images
Dylan Scott covers health care for Vox. He has reported on health policy for more than 10 years, writing for Governing magazine, Talking Points Memo and STAT before joining Vox in 2017.

The last hitch for the Republican tax overhaul has been the child tax credit. Sen. Marco Rubio (R-FL) threatened to withhold his vote over it, which could — could — have been a problem for passing the bill, given the narrow GOP majority in the Senate.

Republican leaders are making some last-minute changes to win him over. It looks like they’re going to give him something — and Rubio is now expected to vote for the final bill.

What the senator seems to have gotten isn’t what he had once wanted — and, while it would provide help to people with lower incomes, it would not really help the poorest Americans.

But it is enough for Rubio to back the bill. He was, in his defense, contending with a Republican conference that was reluctant to give him anything at all on this issue.

The Florida senator has wanted to change the bill so that the tax credit benefits more low-income Americans. Senate Republicans are already expanding the tax credit in their bill, but in such a way that middle-class and higher-income families will see the full benefit, while people who make less money will see a smaller increase. (Read this breakdown from Vox’s Dylan Matthews to get the full story.)

The whole debate can seem a little abstract. The calculation for the child tax credit is very complex. Two different issues are under discussion.

Let’s look at it three ways: what the bill did, what it does now, and what it could have done.

What the original Senate tax bill did

The Senate bill did expand the child tax credit, from $1,000 to $2,000, but did little to change the calculation so that the poorest families could receive a bigger benefit. It also placed a cap on how much of a refund people receiving the child tax credit could get, at $1,100 per child.

So under the Senate-passed version of the tax bill, people with lower incomes would see only a partial benefit under the new tax credit, while families with higher incomes could receive the full credit.

Some examples: A single mom with two kids making $14,500 a year would see a $75 bump in her child tax credit under the original Senate bill, according to the left-leaning Center on Budget and Policy Priorities. A married couple with two kids making $24,000 would see a $200 increase in their tax refund.

What the final tax bill will reportedly do

There are two issues around the child tax credit in play here:

  • How much of a person’s earnings are used to calculate their tax credit and refund. Under current law, the first $3,000 of a person’s income is excluded, which limits the benefits for the poorest people. The Senate bill would have lowered that threshold to $2,500, a change but a very modest one.
  • How big of a refund lower-income people are allowed to claim through the child tax credit. The Senate bill would have capped refunds at $1,100 per child.

Rubio has proposed changing both of these provisions, by lowering the earnings threshold so that the poorest people get a bigger tax refund and increasing the size of the refund they’re allowed to claim.

But according to multiple reports, Republicans appear to be only addressing the second issue. They will increase the cap on the refund from $1,100 to $1,400. But it does not look like they will touch the earnings threshold.

The result is that the poorest Americans would still be left at a major disadvantage. That’s not to say the change wouldn’t help anybody — a family of four making $24,000 is going to get a bigger tax refund. But the single mom making $14,500 won’t receive any boost in her savings.

Here are the numbers under the final reported bill, based on CBPP’s math: The married couple with two children making $24,000 would receive an $800 boost from current law. But the single mom with two kids making $14,500 would still get only $75 more.

What Rubio was pushing to get in the tax bill

Rubio and Sen. Mike Lee (R-UT) have also wanted to reduce the earnings threshold, taking it all the way down to $0. But unless the public reports about the final bill are incomplete, they aren’t going to get it.

This is the change that would have yielded bigger benefits for the poorest people. Under the Rubio-Lee proposal, our single mom would see a $494 bump in her child tax credit instead of only $75, according to CBPP. That’s a meaningful increase for a person who is making less than $15,000 a year.

If this is confusing, this chart should make it clear. The blue bar is the original Senate bill. The orange bar is the reported final tax deal between the House and Senate. The yellow bar is what could have been if the refund cap were increased and the earnings threshold were lowered to $0.

Ernie Tedeschi

As you can see, making both changes would have provided far more benefit for poorer people. The final deal would improve things for some people, particularly those making $20,000 to $40,000 a year, but not nearly as much as could have been and with almost no benefit to the poorest Americans.

This is all in the context of a bill that cuts corporate taxes by $1 trillion, rolls back the estate tax on wealthy inheritances, and is expected to cut the top individual tax rate for people making $1 million or more.

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