Latest news with #ChildTaxCredit
Daily Mirror
15 hours ago
- Politics
- Daily Mirror
Two-child benefit cap attacked by Labour minister in hint it could be scrapped
Education Secretary Bridget Phillipson, co-chair of the Government's Child Poverty Task Force, said the two-child benefit limit would not have been brought in under Labour and said it is 'clear' it is having an impact A Labour frontbencher has attacked the impact of the two-child benefit limit - in the strongest hint yet it could be ripped up. Education Secretary Bridget Phillipson said it "was not something that a Labour government would have introduced" before saying it was "clear" it had an impact on child poverty. Ms Phillipson, who co-chairs the Government's Child Poverty Task Force, said she is looking at "every way in which can lift more children out of poverty". Ministers face growing calls to tear up the controversial policy, which restricts Child Tax Credit and Universal Credit to the first two children in a household. Ms Phillipson said: "The two child limit was not something that a Labour government would have introduced. "It was a measure introduced by the Conservative Party. It's clear it's had a significant impact.." The Education Secretary said she and Work and Pensions Secretary Liz Kendall, her fellow co-chair, are looking at how social security measures can bring rates down. She said: "As part of the work that I'm doing together with the Work and Pensions Secretary, we're looking at every way in which we can lift more children out of poverty. "So all areas are under consideration, including social security measures." Think-tank the Institute for Fiscal Studies (IFS) has estimated that half a million children could be lifted out of poverty if the two-child limit was scrapped. The policy, drawn up by Tory austerity Chancellor George Osborne, came into effect in 2017. Ms Phillipson said: "Child poverty is a scar on this country it devastates childrens' life chances but it damages all of us and we're all poorer as a result of so many children growing up in poverty." The Government's strategy was expected to be presented in the spring, but is now not set to be released until later this year. "We'll publish the child poverty strategy later this year. We want to make sure it's thorough and comprehensive and addresses all of the challenges we face, but also demonstrates clear Government action to bring down child poverty. "Of course, we're not waiting around for the child poverty strategy. I was delighted to be able to announce the expansion of free school meals eligibility to all families on Universal Credit, and that will lift at least 200,000 children out of poverty. "It will benefit more than half a million children, and it puts money directly back in the parents pockets. So that is I'm delighted we were able to deliver that, because I know it will make a really big difference to parents, to children, but also to schools as well, because what they tell me is that the damage that poverty causes affects children's ability to learn. "So that is the difference that a Labour Government is able to make within the first year." Ms Phillipson also pointed to free breakfast clubs being rolled out across the country, as well as school-based nurseries providing more childcare places, and a cut in the cost of school uniforms. "These are all practical measures that will help parents, but also will deliver better outcomes for children," she said. But the Government faces criticism after its own data suggested 50,000 children could be pushed into relative poverty by 2030 as a result of welfare cuts. " What the data doesn't take into account is the extra support that we're putting in place around supporting people back into work," she said. "It also doesn't account for the changes that we've made around free school meals. "So as a government, we are committed to bringing down the number of children growing up in poverty."
CNBC
2 days ago
- Business
- CNBC
'Most taxpayers will see a cut': Senate's tax plan for Trump's spending package would permanently extend TCJA cuts
This week, the Senate Finance Committee released details on its version of President Donald Trump's "big, beautiful" budget bill. The committee's text reveals some departures from the version of the legislation that passed the House last month, including differences in Medicaid rules, state and local tax deduction limits and clean energy tax credits. The differences could set up the two chambers to duke it out over the details as they approach a self-imposed July 4 deadline to get the legislation on Trump's desk. If you're wondering if your taxes are likely to go down next year, the answer is almost certainly, "yes." That's because both versions of the bill permanently extend the tax cuts introduced in the 2017 Tax Cuts and Jobs Act, while also introducing a new slate of breaks for filers. "It's a continuation of tax policy in place right now, plus additional tax cuts on top of that," says Erica York, vice president of federal tax policy at the Tax Foundation. "On net, most taxpayers will see a tax cut, and on average, all income groups would see a tax cut." The 2017 bill brought about sweeping, albeit temporary, changes to the tax code. Provisions which nearly doubled the standard deduction, upped the monetary thresholds for tax brackets, lowered the top tax rate and bumped up the child tax credit are set to expire at the end of 2025. If Congress lets that happen, 62% of taxpayers will see an increase in what they pay Uncle Sam, according to Tax Foundation estimates. "Lawmakers across the board, and I would say even across the aisle, agree that they don't want to see those tax increases happen for the vast majority of Americans," says York. Whether the final version of the budget bill looks more like the House or Senate version, Americans are getting continuity: the same tax rates, the same brackets and a standard deduction that's high enough to keep taxes simple for the vast majority of Americans; just 9% of taxpayers itemized in 2022, compared with 31% in 2017, according to data released by Congress. Both versions of the bill call for an increase in the standard deduction beginning after tax year 2025. However, some tax breaks look different in the Senate and House versions of the legislation. The Senate bill, for instance, raises the nonrefundable Child Tax Credit to $2,200 starting in 2025, $300 lower than what the House proposed. Both versions make good on Trump's campaign promise to do away with taxes on tipped income, but the Senate legislation caps the deduction at $25,000 a year, with different rules about who can claim the break based on income. Regardless of what the bill looks like in its final form, it's worth keeping track of exactly how it affects what you owe come tax time, says York. To figure out what kind of tax break you got, focus on what you pay next year versus what you paid this year, she says — not the difference in any refund you might receive. "Your refund doesn't really reflect how much you actually pay. It just reflects whether your withholding matched up with what your tax liability was supposed to be," she says. "Whether or not you get a refund [is] not related to what Congress is doing with tax law."
Yahoo
3 days ago
- Business
- Yahoo
Dave Ramsey: Millennials and Gen Zers Want the Child Tax Credit To Be $5K — How This Would Impact Your Wallet
A new survey by Ramsey Solutions found that millennials and Gen Zers want the child tax credit (CTC) to be increased to $5,000. Some respondents claim this increase would have an impact on their decision to have children. For younger Americans facing high costs of living, student loan debt and stagnant wages, this kind of financial relief could help make parenthood feel more attainable. Discover More: Try This: However, a bigger tax credit doesn't just affect new or future parents; it could have ripple effects across generations. Here's why younger generations are rethinking parenthood, and how it could impact your wallet. Also find out how you can qualify for the child tax credit. According to the IRS, the (CTC) allows eligible taxpayers to reduce their federal income tax bill by up to $2,000 per qualifying child. Under the Tax Cuts and Jobs Act, the CTC is set to drop back to $1,000 after 2025 if Congress doesn't take any action. If passed, President Trump's 'One, Big, Beautiful Bill' would make the $2,000 credit permanent and raise the cap to $2,500 through 2028, after which the value would return to $2,000 and adjust for inflation. There are no plans to increase the amount beyond these figures, but Ramsey Solution's The State of Personal Finance report for the fourth quarter of 2024 found that 45% of millennial and Gen Z respondents say increasing the CTC from $2,000 to $5,000 per child would have a 'significant or moderate impact' on whether or not they decide to have children. Find Out: Millennials and Gen Zers have delayed parenthood due to financial pressures, including rising housing costs, childcare expenses and concerns about economic uncertainty. The most recent report from the U.S. Department of Agriculture, based on 2015 data, estimated it costs over $233,000 to raise a child through age 17, not including college. Given inflation and rising living costs, the actual figure today is likely even higher. According to a 2024 survey by Pew Research Center, six in 10 respondents said providing free child care would encourage more people to have children. Respondents also supported requiring employers to offer paid family leave, expanding tax credits and issuing monthly payments to parents of minor children. A larger child tax credit could offer relief to families raising kids, but that money has to come from somewhere. And the financial impact wouldn't be limited to parents alone. The Joint Committee on Taxation (JCT) estimates that a permanent expansion of the CTC with the added boost would cost $880 billion over the 10-year period. That kind of long-term spending raises questions about how the government would cover the cost, whether through higher taxes, increased borrowing or cuts to other federal programs. For older generations, including Baby Boomers and Gen Xers who are no longer raising young children, some could see their tax burden increase or face reduced investment in programs they rely on, such as Medicare or Social Security. Younger generations could also feel the impact. Since the expanded credit would not apply to them, they may still face higher taxes or reduced access to other federal services if offsets are needed to fund the program. More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard 5 Cities You Need To Consider If You're Retiring in 2025 10 Unreliable SUVs To Stay Away From Buying This article originally appeared on Dave Ramsey: Millennials and Gen Zers Want the Child Tax Credit To Be $5K — How This Would Impact Your Wallet Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Politico
3 days ago
- Business
- Politico
Senate Republicans cool to Finance Committee's tax plan
Senate GOP leaders are facing early pushback over a key plank of their 'big, beautiful bill' just hours after rolling it out, underscoring the work that remains to bring the legislation to the floor next week. Signs of discontent within the Republican Conference came as Senate Finance Chair Mike Crapo privately briefed his colleagues Monday night on his portion of the megabill central to enacting key elements of President Donald Trump's domestic agenda. Crapo's committee is responsible for some of the most politically consequential components of the party-line package, including changes to Medicaid, the fate of clean-energy energy tax credits and the state-and-local tax deduction that is important to high-tax state House Republicans. The briefing Monday was designed to explain the panel's rationale, answer questions and alleviate any anxieties. But immediate reaction from lawmakers across the ideological spectrum upon that meeting's conclusion indicated leadership has a ways to go — especially as Republicans still hope to meet their self-imposed July Fourth deadline for clearing the larger bill for Trump's signature. 'We're not doing anything to significantly alter the course of the financial future of this country,' Sen. Ron Johnson (R-Wis.) told reporters Monday evening, adding that the current Senate Finance proposal 'does not meet the moment' and that he would vote no if it came to the floor as is. Sen. Josh Hawley (R-Mo.), who has drawn public red lines over any overhauls to Medicaid resulting in potential losses in benefits, described himself as 'alarmed' by the committee's new plan, which would go further than the House bill on making changes to the health care safety net program. 'This needs a lot of work. It's really concerning and I'm really surprised by it. … I'd be really interested to see what the president thinks of it,' said Hawley, who has previously said that Trump personally told him the bill should not cut Medicaid benefits. Senate Republicans agreed to nothing in the Monday night meeting, according to attendees, with Senate Majority Leader John Thune and Crapo both emphasizing that Republicans were engaged in an ongoing negotiation — both among themselves and with their House counterparts, who passed their version of the megabill last month. Thune afterward summed up his message to the conference as: 'We gotta get this done.' Sen. John Hoeven (R-N.D.), in describing Crapo and Thune's messaging at the briefing, said, 'They're really patient. They are listening to everyone's ideas. And they're still working on it — it's still a work in progress.' Crapo's bill would, among other things, scale back some of Trump's campaign promises on creating new tax breaks for tips and overtime. He is also seeking to soften the House-passed bill's endowment tax hike and include a smaller increase on the Child Tax Credit. Senators also pitched Crapo and Thune at the Monday meeting on their own ideas about what they still want to see in the bill. Sen. James Lankford (R-Okla.), a member of leadership, said the meeting 'wasn't hostile' but lawmakers told Crapo and Thune, 'I've got questions.'' Lankford added, 'Some people were like, 'I want to go even more.' … But somebody else would step up and say, 'that's already farther than I want to be able to go.'' Thune wants to put the bill on the floor next week, when he can only lose three GOP senators and still ensure the measure's passage. Sen. Rand Paul (R-Ky.) is widely expected to vote 'no.' And based on the early reaction to both the tax portion of the megabill, Thune still has work to do to shore up his whip count elsewhere, too. Sen. Rick Scott (R-Fla.), who shares Johnson's concerns about spending too much and not reducing the deficit enough, said he also doesn't believe the emerging Senate megabill framework goes far enough on Medicaid. Scott suggested that lawmakers should reconsider attaching a provision to the bill that would scale back the 90 percent of Medicaid expansion costs covered by the federal government. This policy change would yield major savings to offset the legislation's heavy price tag, but was deemed too politically toxic to follow through on in the House. 'The only way this is going to get fixed is — we've got to say the 90-10 match doesn't make any sense,' Scott said after the closed-door meeting. Elsewhere in the conference, Hawley and other Senate Republicans are squeamish about the Senate Finance plan to draw down the provider tax and how that would impact funding for rural hospitals. Many states use this tax to help fund their Medicaid programs. Sen. Susan Collins of Maine largely declined to comment as she left the meeting, but asked if she still had concerns about the provider tax, she said: 'Yes, I do.' And while she credited leadership with consulting closely with her as they drafted the Finance draft text, conceded they didn't heed her on every demand: 'Sometimes yes, sometimes no.' The Senate Finance Committee text released Monday also would soften the House version's phaseout of Biden-era clean-energy tax credits, where members of the House Freedom Caucus won eleventh-hour concessions from leadership to pursue more aggressive rollbacks of the green incentives. The Senate panel's proposed language would constitute its own concession to some purple-state and moderate Republicans who have warned that the House bill would undercut businesses that have already made investments based on certainty around the climate law subsidies. But GOP leadership's attempts to find a middle ground sparked public pushback from Sen. Mike Lee, with the Utah Republican writing on X, 'Extending these subsidies beyond the Trump administration effectively makes them permanent Who else did *not* vote for that?' Complicating matters: It's not just Senate Republicans who are crying foul over details of the Senate Finance proposal. House Republicans are warning, too, that the committee's initial draft text that put the SALT dedication cap at $10,000 is a nonstarter in their chamber, where Speaker Mike Johnson cut a deal to raise it to $40,000. Republicans tried to mollify their House counterparts Monday by noting that their initial offer was just a stand-in as they continue discussing a different cap all sides could live with. Sen. Markwayne Mullin (R-Okla.) said that he had also been in touch that very day with Rep. Mike Lawler (R-N.Y.), who panned the Senate proposal as 'dead on arrival.' 'That was just a placeholder,' Mullin said. 'I talked to Mike about it. We understand.' House Ways and Means Chair Jason Smith (R-Mo.), in a social media post late Monday, offered congratulations to Crapo on his chamber's opening bid. 'We've worked closely together for months to reach agreement on key provisions, while understanding the work that remains to be done to achieve consensus between both chambers of Congress and get this bill on the President's desk,' said the House's chief tax writer. 'We will thread that needle to respect the needs of both bodies in the days ahead. Benjamin Guggenheim contributed to this report.
Yahoo
3 days ago
- Business
- Yahoo
Senate Finance unveils committee's portion of GOP megabill
Senate Finance Chair Mike Crapo on Monday unveiled changes to how the GOP's 'big, beautiful bill' would execute a major tax revamp and Medicaid cuts — two of the thorniest policy fights in the sweeping legislation. The release comes after closed-door negotiations between Crapo and his colleagues over how to revise the version of the megabill the House passed last month. Crapo's plan would create more limited tax breaks for tips and overtime demanded by President Donald Trump. It also holds the cap on the state and local tax deduction to the current $10,000, far less than the House's $40,000, though the Senate number is widely considered a placeholder. In the much-anticipated legislation, the Idaho Republican is also proposing to scale back a planned hike in a 1.4 percent tax on university endowment earnings. Under his plan, it would max out at 8 percent, compared to the 21 percent the House has proposed. He also wants a smaller increase in the Child Tax Credit than what his House colleagues have proposed, increasing it to $2,200 per child rather than $2,500, while making a trio of popular business breaks permanent. Elsewhere in the plan, Crapo would create a more generous $2,000 deduction for couples who give to charity but don't itemize their deductions. They'd get $300 under the House plan. Senate Republicans are under pressure to make minimal changes, given their thin hold on the lower chamber. But that could be difficult for some senators eager to put their own imprint on the legislation and who have long viewed House tax bills as little more than first drafts in need of heavy editing. Senate Republicans aim to quickly bring the plan to the chamber floor, with an eye toward getting it to Trump's desk by their July 4 recess, though some have warned that deadline could slip. 'I look forward to continued coordination with our colleagues in the House and the Administration to deliver President Trump's bold economic agenda for the American people as quickly as possible,' Crapo said in a statement. It was not immediately clear whether Crapo's plan sticks to the overall $4 trillion tax-cutting budget House Republicans set for themselves. If Senate Republicans exceed it, that could also be a big problem for deficit hawks across the Capitol, who have been adamant that lawmakers can spend no more than $4 trillion unless they simultaneously come up with at least $1.5 trillion in spending reductions.
