Senator Harris is looking to increase his income with a new tax credit

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Senator Kamala Harris (D-CA) is proposing to increase the incomes of working families through a new tax proposal called "LIFT Middle Class Act (Living Income for Families Today"). hui) ". This new refundable tax credit would correspond to earnings of up to $ 3,000 for singles and $ 6,000 for married couples (see figure) aged at least 18 years old. Students who receive Pell Grants would be eligible and, unlike other credits designed to reward a job – including earned income tax credit (CIT) – this new tax credit would provide benefits. workers without children at home. It is important to note that recipients could choose to accept the credit each month and not wait for tax season – a schedule that could help stabilize income throughout the year. This new tax credit would be added to any EITC to which the family qualifies.

Creating an identical tax credit for workers with and without children at home would be a step towards equalizing the tax benefits granted to custodial and non-custodial parents.

Subsidizing work – without mingling with the presence of children – could also make credit easier to administer and claim. Although the largest number of EITC errors are attributable to income tax reporting errors, the identity of the tax unit to which a child is entitled is the largest source of erroneous payments. Under this new credit, applicants are not required to become familiar with sometimes complicated rules for determining the eligibility of a child – and parents who live separately can benefit. It's a lot easier for the IRS to check how much you earned than to know who you were living with.

Finally, the granting of tax credit on a monthly basis would allow people with an irregular income to stabilize more easily. A recent pilot project in Chicago suggested that recipients preferred a monthly credit and those who received funds throughout the year borrowed less and experienced less financial hardship. Since many credit recipients would receive the new credit and their existing EITC, the benefits could be even greater. On the other hand, like all credits in this phase-out, the proposed tax credit would increase marginal tax rates for taxpayers in the elimination bands, which could have a chilling effect on work. Previous research on EITCs suggests that this effect would be modest and would mainly apply to those earning secondary income in married couples.

This plan would probably be expensive. Harris suggests paying for this with fees on some financial institutions and repealing parts of the law on tax reduction and employment that do not provide tax relief to families whose income is less than $ 100,000.

It is true that the current EITC takes more people of working age out of poverty than any other government program. But this credit leaves many people. Senator Harris's version would take many more people out of poverty.

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Senator Kamala Harris (D-CA) is proposing to increase the incomes of working families through a new tax proposal called "LIFT Middle Class Act (Living Income for Families Today"). hui) ". This new refundable tax credit would correspond to earnings of up to $ 3,000 for singles and $ 6,000 for married couples (see figure) aged at least 18 years old. Students who receive Pell Grants would be eligible and, unlike other credits designed to reward a job – including earned income tax credit (CIT) – this new tax credit would provide benefits. workers without children at home. It is important to note that recipients could choose to accept the credit each month and not wait for tax season – a schedule that could help stabilize income throughout the year. This new tax credit would be added to any EITC to which the family qualifies.

Creating an identical tax credit for workers with and without children at home would be a step towards equalizing the tax benefits granted to custodial and non-custodial parents.

Subsidizing work – without mingling with the presence of children – could also make credit easier to administer and claim. Although the largest number of EITC errors are attributable to income tax reporting errors, the identity of the tax unit to which a child is entitled is the largest source of erroneous payments. Under this new credit, applicants are not required to become familiar with sometimes complicated rules for determining the eligibility of a child – and parents who live separately can benefit. It's a lot easier for the IRS to check how much you earned than to know who you were living with.

Finally, the granting of tax credit on a monthly basis would allow people with an irregular income to stabilize more easily. A recent pilot project in Chicago suggested that recipients preferred a monthly credit and those who received funds throughout the year borrowed less and experienced less financial hardship. Since many credit recipients would receive the new credit and their existing EITC, the benefits could be even greater. On the other hand, like all credits in this phase-out, the proposed tax credit would increase marginal tax rates for taxpayers in the elimination bands, which could have a chilling effect on work. Previous research on EITCs suggests that this effect would be modest and would mainly apply to those earning secondary income in married couples.

This plan would probably be expensive. Harris suggests paying for this with fees on some financial institutions and repealing parts of the law on tax reduction and employment that do not provide tax relief to families whose income is less than $ 100,000.

It is true that the current EITC takes more people of working age out of poverty than any other government program. But this credit leaves many people. Senator Harris's version would take many more people out of poverty.