Late on a Friday, Congressional Republicans have released the final version of their tax bill. As expected, this compromise does nothing to transform the terrible House and Senate versions of the bill; it lavishes tax cuts on corporations and the richest households, raises taxes on tens of millions of middle-class families, and does nothing to spur wage growth for working Americans. Senator Rubio has trumpeted a minor change in the child tax credit (CTC) as a victory for working-class families. This is a bad joke.
For one, even a genuinely significant increase in the CTC in this bill would not have changed that fact that the net impact of the entire package is horribly regressive. But the changes in the CTC that Rubio secured in exchange for his vote are trivial. The details are complicated, but the key change that would have made the CTC substantially more progressive would have been getting a “first dollar phase-in,” allowing a worker’s payroll tax liability to be deducted from the first dollar of earnings. Instead, the compromise bill keeps the $2,500 threshold for earnings before the benefits of the CTC begin phasing in, which significantly blunts the ability of the CTC to deliver credits to poor households. A substantial share of working families with children will get just trivial ($75 per year or less) increases in CTCs due to the compromise bill, which represents no change at all for them relative to the Senate bill. In short, Rubio delivered nothing for this substantial share of poor families. And perversely, one way the cost of this small boost in the CTC will be financed in the compromise bill is by denying this credit for 17-year-olds—actually making this less generous than the Senate version of the bill, which allowed this credit for them.
In all, this bill remains what it’s always been: a giveaway to the richest people and corporations in America.