Instead of families waiting for annual income tax returns to benefit from tax breaks for their children, Sen. Mitt Romney is proposing giving them monthly payments of $350 for children age 5 and under and $250 for school-age kids — and boosting overall support.
“This proposal offers a path toward greater security for America’s families by consolidating the many complicated programs to create a monthly cash benefit for them, without adding to the deficit,” Romney said Thursday as he unveiled his proposal.
He calls it the Family Security Act and says it wouldn’t increase overall government spending because it would do away with one of the central welfare programs and also some targeted income tax credits.
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The proposal would rework the existing Child Tax Credit and the Earned Income Tax Credit and provide extra funding to support children by eliminating a current deduction for state and local taxes paid, which Romney calls “an inefficient tax-break to upper-income taxpayers.”
It would also eliminate Temporary Assistance for Needy Families (a welfare assistance program), and make some eligibility changes in the Supplemental Nutrition Assistance Plan, formerly called Food Stamps. It would also eliminate the “head of household” status in filing income taxes, often used by divorced individuals.
Romney figures his framework would increase the amount spent annually nationally to help families with children from $188 billion to $254 billion.
Romney’s child benefits plan comes as Democrats prepare a similar effort as part of President Joe Biden’s proposed $1.9 trillion pandemic aid package. Romney has said Biden’s stimulus proposal is too expensive, meaning he may against the broader plan even if it includes much of his new child benefits proposal.
The Washington Post reported that Romney may offer his proposal as an amendment to the Democrats’ budget resolution that is being used as the vehicle for passing Biden’s aid package.
Rep. Mike Lee opposed Romney’s proposal late Thursday. He and Sen. Marco Rubio, R-Fla., issued a statement saying they had long fought to increase the Child Tax Credit, “However, we do not support turning the Child Tax Credit into what has been called a ‘child allowance.’”
They said it amounts to welfare assistance. “An essential part of being pro-family is being pro-work. Congress should expand the Child Tax Credit without undercutting the responsibility of parents to work to provide for their families,” Lee and Rubio wrote.
Romney’s proposal would provide children age 5 and under a total of $4,200 a year, with payments of $350 a month. Children ages 6 through 17 would receive $3,000 a year, provided through monthly payments of $250.
“American families are facing greater financial strain, worsened by the COVID-19 pandemic, and marriage and birth rates are at an all-time low,” Romney said in a news release. “On top of that, we have not comprehensively reformed our family support system in nearly three decades, and our changing economy has left millions of families behind.”
He said now is the time to reform the system to provide monthly payments, and not require waiting for annual tax refunds.
“Now is the time to renew our commitment to families to help them meet the challenges they face as they take on most important work any of us will ever do — raising our society’s children,” he said.
Romney offered an example of how his changes might work.
A married couple with two children ages 4 and 9 making $38,990 a year (150% of the federal poverty line) now receive an end-of-year credit on their tax return of $7,041. Under Romney’s proposal, their annual benefit would increase by $2,318, and 75% of the total would come through predictable monthly installments.
Romney said parents would be eligible to apply for benefits four months before a baby’s due date to help the family cover expenses as they prepare for a birth.
He said monthly payments would be administered through the Social Security Administration and would be available to all children with a required Social Security number.
Annual child benefits would be reduced by $50 for every $1,000 above the current Child Tax Credit (CTC) income phaseout thresholds of $200,000 for single-filers and $400,000 for joint-filers. Any overpayments or underpayments would be reconciled through the IRS after filing year-end taxes.
Romney said his proposal would also eliminate marriage penalties and create better work incentives.
A Romney news release said “low-income families would no longer have to choose between a bigger paycheck or maintaining eligibility for support,” and also asserted that it would “immediately lift nearly 3 million children out of poverty, while providing a bridge to the middle class – without adding a dime to the federal deficit.”
Romney also said it would provide equal treatment for both working and stay-at-home parents, and would reform and consolidate outmoded federal programs.