H.R.1425 - To amend the Internal Revenue Code of 1986 to increase the amount of the child tax credit, to make such credit fully refundable, to remove income limitations from such credit, and for other purposes. (119th Congress)
Summary
H.R. 1425 proposes significant changes to the Child Tax Credit (CTC) outlined in the Internal Revenue Code. The bill aims to increase the CTC amount from $1,000 to $5,000 per child. It also seeks to make the credit fully refundable and remove existing income limitations.
Furthermore, the bill includes provisions to remove what it terms "deadwood" from Section 24 of the Internal Revenue Code. This involves striking out subsections and paragraphs that are deemed obsolete or no longer applicable.
Finally, the changes, if enacted, would apply to taxable years beginning after December 31, 2024.
Expected Effects
The enactment of H.R. 1425 would substantially increase the financial assistance provided to families with children through the tax system. More families, including those with lower incomes, would become eligible for the full credit amount.
The simplification of the CTC, by removing income limitations and obsolete provisions, could reduce administrative burdens for both taxpayers and the IRS. It could also lead to increased economic activity as families spend the additional funds received through the expanded credit.
However, the increased cost of the CTC could also lead to increased budget deficits.
Potential Benefits
- Increased financial support for families with children, potentially reducing child poverty.
- Simplified tax code due to the removal of income limitations and obsolete provisions.
- Greater economic stimulus as families spend the increased credit.
- Improved equity by making the credit fully refundable, benefiting low-income families.
- Potential for improved child well-being due to increased family resources.
Potential Disadvantages
- Increased government spending and potential budget deficits.
- Potential for inflation if the increased credit stimulates demand without a corresponding increase in supply.
- Possible disincentive to work for some low-income families if the credit is too generous.
- Complexity in administering the new credit, despite simplification efforts.
- Potential for fraud and abuse if the credit is not properly monitored.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's alignment with the US Constitution is primarily related to the "general Welfare" clause of the Preamble. Congress has broad authority to tax and spend for the general welfare, and the Child Tax Credit falls under this power.
However, the expansion of the credit could raise concerns about the scope of federal power and potential impacts on state budgets. The bill does not appear to infringe on any specific individual rights or liberties protected by the Bill of Rights.
Ultimately, the constitutionality of the bill would likely depend on whether it is viewed as a reasonable exercise of Congress's taxing and spending powers.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).