Stronger Start for Working Families Act
Summary
The "Stronger Start for Working Families Act" proposes amending the Internal Revenue Code of 1986 to modify the earned income threshold for the refundable child tax credit. Specifically, it aims to lower the threshold from $3,000 to $1. This change is intended to make the child tax credit more accessible to low-income families.
The bill also includes a conforming amendment to remove paragraph (6) from Section 24(h) of the Internal Revenue Code. The amendments are set to apply to taxable years beginning after December 31, 2025.
Introduced in the Senate by Ms. Hassan and Mr. Young, the bill has been referred to the Committee on Finance for further consideration.
Expected Effects
The primary effect of this bill would be to expand the eligibility for the refundable child tax credit to families with very low earned income. By reducing the income threshold to $1, more families could qualify for the credit, potentially increasing their financial resources. This could lead to a reduction in child poverty and improved financial stability for low-income households.
The removal of paragraph (6) from Section 24(h) is a technical adjustment to align with the new income threshold. This ensures consistency in the application of the child tax credit.
Overall, the bill aims to provide greater financial support to working families with children, particularly those with the lowest incomes.
Potential Benefits
- Increased access to the child tax credit for low-income families.
- Potential reduction in child poverty rates.
- Improved financial stability for eligible households.
- Simplified tax filing process for families with minimal income.
- Greater equity in the distribution of tax benefits.
Most Benefited Areas:
Potential Disadvantages
- Potential for increased government spending on the child tax credit.
- Possible need for additional IRS resources to process increased claims.
- Risk of fraudulent claims due to the lower income threshold.
- Potential for unintended consequences related to workforce participation.
- The bill does not address the overall size of the child tax credit, only the income threshold.
Most Disadvantaged Areas:
Constitutional Alignment
This bill appears to align with the Constitution's general welfare clause, as it aims to provide financial assistance to low-income families with children. The general welfare clause, found in the Preamble, allows Congress to enact laws that promote the well-being of the population. Article I, Section 8, Clause 1 grants Congress the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States.
However, the specific details of the tax credit and its implementation would need to be carefully considered to ensure compliance with other constitutional principles, such as equal protection under the law. The bill itself does not appear to infringe upon any specific constitutional rights or limitations.
As a tax bill, it falls under the purview of Congress's enumerated powers related to taxation and spending.
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).