Biden’s tax credits benefit non-workers most

Speaking at the White House last week about the proposed enhanced child tax credit and its effect on cashiers and waitresses, President Biden said: “It changes the whole dynamic for working parents.”

No, Mr. President, your plan does not “change the whole dynamic for working parents,” or provide something new to working, low-income parents that the government didn’t provide before.

Refundable tax credits have long been part of how we reward work and support working parents. Under the law prior to President Biden’s American Rescue Plan, a single mother with two young children, working as a waitress full time at $10 per hour, received $8,230 as a result of the combined benefits from the Earned Income Tax Credit [approx. $5980] and the old version of the Child Tax Credit [approx. $2250].

President Biden’s new program increases the child tax credit payments in place previously, but more significantly, it expands them to non-working parents. That same single waitress with two young kids now gets $4,950 more in cash from the child tax credit than she did before, bringing her income from refundable tax credits to more than $13,000. But the real change is that if she stopped working entirely, she still gets $7,200, when before she would not have been eligible unless she worked enough to report $2,500 in annual earnings.

The new beneficiaries of President Biden’s new policy — the group for which “the whole dynamic” would change — are non-workers. They will have a much more dramatic rise in their incomes because of this policy. For the first time, they will receive benefits that had been previously, and appropriately, reserved for parents who worked. The result is that relative to work, non-work becomes more rewarding.

By pretending to pioneer a refundable tax credit for working parents, President Biden is misleading the American people to promote his policies. He knows that refundable tax credits for working parents have existed for years. The president should tell the American people the truth: The only new policy here is monthly cash payments to non-working families.

Why doesn’t he say that? Because he knows that a new cash handout for non-workers is unpopular, and for good reason. It will discourage employment, which scholars and most Americans know is the best path out of poverty.

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