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US President Joe Biden delivers remarks on International Women’s Day at the White House in Washington, March 8, 2021.
Tom Brenner | Reuters
President Joe Biden’s coronavirus relief plan will boost low-income households more than the tax law signed by former President Donald Trump did, according to an analysis.
The $ 1.9 trillion pandemic assistance bill passed by the Senate will increase after-tax income by about 20% on average for households earning $ 25,000 or less, the poorest 20%, according to Tax Policy Center estimates released Monday. The typical first-year tax cut for these households under the 2017 Republican plan was 0.4%.
The two plans will have very different effects on top incomes, according to the analysis. Average after-tax household income earning more than $ 3.4 million, the highest 0.1%, would not increase under the coronavirus relief bill. It increased by 2.7% under the GOP law.
In total, low- and middle-income households would receive more than two-thirds of the tax benefits from the Biden stimulus package, compared to just 17% under Republican tax law.
The pandemic relief bill passed by the Senate is expected to pass through the House on Wednesday. Biden is expected to sign it into law by the weekend.
Key economic aid provisions include a $ 300 per week increase in unemployment insurance, $ 1,400 in direct payments to most Americans and their dependents, an expansion of the child tax credit, and a rent assistance. The Center for Tax Policy based its estimates on policies including stimulus checks and an enhanced child tax credit, the earned income tax credit and the child care tax credit and dependents.
Under the bill, Americans eligible for a payment of $ 1,400 would receive the same amount for each dependent. The child tax credit will increase to $ 3,600 for children under 6 and $ 3,000 for children 6 to 17 for one year.
As a result of these policies, low-income households with children would see an average increase of about $ 7,700, or 35% of their after-tax income, according to the analysis.
Democrats said the legislation would lessen the economic damage from the pandemic and prevent future suffering. They also touted it as a way to reduce child poverty in the United States.
Republicans say a recovering economy doesn’t need nearly $ 2 trillion more in stimulus. They said Democrats invested money in policies unrelated to the public health crisis.
The Tax Policy Center analysis notes that most of the benefits of the pandemic aid bill will come over one year, while the Republican tax changes were expected to last for eight years.
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