Sen. Joe Manchin’s position on the child tax credit has proved an obstacle for Democrats as they craft their social spending package, with both progressives and fellow moderates taking issue with the West Virginia Democrat’s stance.
Manchin said that he wants there to be work requirements for the credit. He has also indicated he thinks there should be “means testing” to lower the income limits for the expanded credit.
Democratic lawmakers and left-leaning groups say Manchin’s proposal could weaken the tax credit’s ability to reduce child poverty and help families cover critical expenses.
“I think that this talk about means testing for what is essentially a tax cut is wrongheaded. The expanded child tax credit is a tax cut,” Sen. Raphael Warnock (D-Ga.) told reporters Tuesday.
The coronavirus relief law President Biden signed in March included a one-year expansion of the child tax credit. Now, Democrats are pushing to extend the expansion as part of their multitrillion-dollar package that is expected to include funding for child care, education, health care and climate.
Previously, taxpayers had to have had at least $2,500 in earned income to be eligible to get any credit, and the credit amount gradually increased above that threshold. As a result, an estimated 27 million children received no credit or a partial credit because they were part of low-income families.
Biden’s relief law made the lowest-income families eligible for the full credit amount — a concept known as full refundability.
The coronavirus relief law increased the maximum credit amount from $2,000 per child to $3,600 for each child under age 6 and $3,000 for each child ages 6 to 17. In addition, the measure directed the IRS to create a program under which the agency makes monthly advance payments so that families receive portions of the credit in installments.
The White House and congressional Democrats view the full refundability portion of the expansion as particularly critical for helping low-income families. Both Biden and the House Ways and Means Committee have proposed as part of the social spending package making the credit fully available permanently for the lowest-income families, while extending other parts of the expansion through 2025.
In contrast, Manchin in recent weeks has suggested that taxpayers should be working or pursuing their education in order to qualify for the child tax credit. The senator’s interest in a work requirement has received renewed attention in recent days after Axios reported on Sunday that Manchin told the White House that this is his priority.
“There’s no work requirements whatsoever. There’s no education requirements whatsoever for better skill sets,” Manchin said on CNN last month. “Don’t you think if we’re going to help the children, that the people should make some effort?”
Manchin has also suggested that he wants to reduce eligibility for the credit at the upper end of the income spectrum.
“Let’s make sure that we’re getting it to the right people,” he said.
Under Biden’s coronavirus legislation, the expanded credit is reduced for married couples with income above $150,000 and single parents using the head-of-household filing status with income above $112,500. Both the Biden administration and House Democrats have proposed maintaining the relief law’s income thresholds for when the credit amount starts phasing out.
Axios reported that Manchin told the White House that he wants to lower the income limit for families to the $60,000 range. A spokesperson for Manchin could not confirm this information to The Hill.
Both progressive and moderate lawmakers are pushing back on Manchin’s preference to limit eligibility for the child tax credit expansion if it is extended.
“Scaling back or limiting the accessibility of this critical pillar of President Biden’s agenda would hurt middle-class families and our children’s futures,” Rep. Suzan DelBene (D-Wash.), chair of the business-friendly New Democrat Coalition, said in a statement Monday.
DelBene added that the coalition, which supports full refundability, “would have serious concerns with any changes that undermine the success of this historic opportunity for families.”
Other Democrats have raised concerns about a potential $60,000 income limit.
“If Senator Manchin thinks that only people making $60,000 or less have needs for their children that they can’t meet, he’s totally out of touch,” retiring Rep. John Yarmuth (D-Ky.), chairman of the House Budget Committee, said in a statement.
“Lowering it the way he’s lowering yet is just not going to help enough families,” Sen. Mazie Hirono (D-Hawaii) also said, adding she hopes “he can be convinced” to change his mind.
A number of think tanks and advocacy organizations also pushed back against work requirements, saying that this kind of provision would hurt some low-income families’ ability to receive money to cover critical expenses such as food, child care and transportation.
The Treasury Department has estimated that 97 percent of families receiving the child tax credit have wages or self-employment income, and many of the remainder involve grandparents raising their grandchildren or people with serious disabilities, advocates pointed out. Groups also pointed to studies that have found that few parents are likely to work less due to a child allowance. Additionally, groups said benefits programs tend to be most effective when they are simple to administer.
“The massive bureaucracy that would need to be created to make sure that everyone receiving it meets eligibility requirements just doesn’t seem worth it to us,” said Jim Kessler, executive vice president for policy at the center-left think tank Third Way.
Some groups also took issue with Manchin’s reported preference to include an income limit of $60,000, saying that would hurt some middle-class families.
Reducing the number of people eligible for the expanded child tax credit is “totally unnecessary and cruel,” said Justin Ruben, co-director of ParentsTogether Action, a group that advocates for policies that help families.
Ruben said that his organization has been encouraging its members in West Virginia to reach out to Manchin and that the group has made videos with parents in the state.
“We’re trying to send him a message in every way we know how,” he said.
An extension of the tax credit is one of a number of popular party-backed priorities included in the Democrats’ sweeping social benefits and climate package that could be scaled back or eliminated as members look to cut costs in the spending plan.
White House press secretary Jen Psaki on Monday declined to talk specifically about Manchin’s stance on the child tax credit but said Biden is open to supporting income limits.
She said that Biden proposed an extension of the expanded credit “because he feels that it is something that can not only help families make ends meet, it can help bring more women back into the workforce, and it is a vital part of his proposed packages.”
Manchin told Democratic colleagues at a lunch Tuesday that he will work with Sen. Bernie Sanders (I-Vt.) and Senate Minority Leader Charles Schumer (D-N.Y.) to come to an agreement on the social spending package by the end of this week, according to sources familiar with discussions.