What the new child tax credit could mean for parents and all Americans. Germany: Over 100 dead, hundreds missing in worst flooding in decades.
What the new child tax credit means for parents and all Americans
Yesterday, millions of American parents with minor children received their first monthly child tax credit. The child tax credit already existed, but the new program, part of a COVID relief package from earlier this year, expands eligibility, raises the total amount of the credit, and introduces monthly rather than yearly payments.
Previously, 23 million children did not receive the full tax credit because their parents did not make enough to qualify. Now, the IRS is reaching out to low-income families that have not traditionally filed tax returns to help them sign up for the program. This will enable low-income families to receive up to $300 per month (or $3600 per year) for every child under 6, and $250 per month (or $3000 per year) for every child aged 6 to 17.
While this program is temporary, President Biden and Treasury Secretary Janet Yellen hope to make the payments permanent. Congressional Democrats’ $3.5 trillion budget proposal seeks to extend the benefits beyond the pandemic. Both Biden and Yellen see these payments as an important tool to combat poverty in the US. In fact, these payments have tipped millions of US families above the poverty line. Yellen says the payments this year will cut US child poverty by 50%.
Great news, but how to pay for it?
The expanded benefits come with a hefty price tag of a little over $100 billion per year. The COVID relief bill authorized a one-time expenditure of $100 billion for 2021 to 2022. To make the benefits permanent, Secretary Yellen envisions changes in tax rates and the way taxes are assessed and collected. Yellen and Biden want to raise taxes on corporations and taxpayers earning over $400,000 a year.
Furthermore, Yellen says there is currently a huge gap between what the IRS is due from corporations and wealthy taxpayers and what it actually collects. Yellen estimates that if nothing is done, that gap will amount to about $7 trillion over the next decade. To increase tax collection and enforcement, Yellen wants to give the IRS $80 billion over ten years to bolster its auditing.
Additionally, Yellen hopes to close loopholes that currently allow corporations and wealthy Americans to hide billions in assets offshore. Biden has also proposed a rise in the capital gains tax for individuals with incomes over $400,000 per year.
But won’t big corporations just flee to overseas tax havens?
If things stay as they are now, almost certainly. But Yellen and Biden are working with 132 other nations (including all the G20 countries) to establish a global minimum corporate tax rate. Many countries have already enthusiastically signed on to counter what has become a “global race to the bottom” for corporate taxes in recent decades.
Is this a step towards universal basic income?
Some advocates are hoping that this new tax credit, if it becomes permanent, may eventually open the way to a universal basic income at the federal level. Universal basic income (UBI) is exactly what it sounds like. All Americans would receive a minimum monthly income from the federal government regardless of income or employment status.
As wealth and wage gaps among the poorest and wealthiest Americans have grown, many have come to see UBI as the most equitable way to ensure that people who are working full time are able to remain above the poverty line. UBI might also replace or supplement federal unemployment payments to ensure unemployed people can cover basic expenses.
Small-scale programs across the country are already experimenting with this. For example, Ulster County in Upstate New York has initiated a program that gives residents making under $46,000 a year a monthly $500 payment. Recipients can spend the money however they wish. The county is also asking recipients to periodically take part in surveys about their physical and mental health and quality of life.
California has also just approved the first statewide guaranteed income plan. For now, the program only applies to qualifying pregnant women and young adults that are aging out of the state’s foster care system.
Supporters of UBI are banking on the success of programs like these, as well as the newly-expanded child tax credit. They hope these programs will demonstrate to skeptics that UBI can effectively eliminate poverty and improve living standards without decreasing the incentive to work.
Germany floods: Over 100 dead, hundreds missing
Floods have devastated parts of Germany, Belgium and other neighboring countries this week after days of torrential rainfall. Weather experts say the region received about two months’ worth of rain in just a few days. The flooding is the worst Germany has seen in decades.
In western Germany, the rains caused several rivers to burst their banks. The catastrophic deluges have swept away homes and even whole neighborhoods in some areas. Some residents had to be evacuated from the rooftops of their homes.
Hundreds of thousands of people have been affected. Many have been forced to evacuate their homes while others have seen them reduced to rubble. The disaster has left over 100 dead in Germany alone and around 1500 people are still missing. Officials say the high number of missing could in part be due to communications and mobile networks being down in some areas. Frantic rescue efforts have been underway across the region for the last two days.
Germany’s Chancellor Angela Merkel arrived in Washington D.C. to meet with President Biden just as the toll of the devastation was coming to light. At a White House news conference, she addressed the scale of the catastrophe. Merkel expressed her condolences for those who had lost homes and loved ones and sympathy for those still agonizing over the fate of the missing.
Neighboring countries, including France, have already dispatched personnel and helicopters to assist in the rescue effort. European Commissioner Ursula von der Leyen also said the EU stands ready to send whatever help the affected countries need.Angela Merkel, California, child tax credit, flooding, Germany, international news, Janet Yellen, national news, natural disasters, New Albany MS, Northeast Mississippi news, President Joe Biden, universal basic income (UBI), US news, world news