President Joe Biden’s $1.9 trillion coronavirus stimulus package could boost the annual incomes of the country’s poorest Americans by almost $3,600, according to a recent report.
The relief bill, proposed last month, allocates $1,400 direct checks to eligible individuals and expands the the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC), CBS News reported. With those three measures, the poorest 20% of Americans could see a 33% boost in their pre-tax incomes, CBS said, citing the Institute on Taxation and Economic Policy.
In other words, the financial breakdown could be estimated as a $3,590 hike per family, the outlet continued.
According to CBS:
The three programs — a third round of stimulus checks, plus the two expanded tax credits — would provide a similar dollar amount of average benefits to 95% of U.S. households, the ITEP analysis found. But the impact would be much greater for lower-income households because the benefits would represent a larger share of their income. That’s important because the lowest-earning households are more likely to spend that money quickly, providing a boost to the economy while stabilizing their own households, ITEP director of federal tax policy Steve Wamhoff told CBS MoneyWatch.
CNN reported on February 20 that a key House of Representatives committee released the Democrats’ coronavirus relief package, “pulling together President Joe Biden’s stimulus proposal into a 591-page bill.”
The House Budget Committee is expected to consider the legislation on Monday, February 22, CNN said.
Here’s what you need to know:
The Poorest Fifth of Americans Would Receive a Total Income Boost of $3,590, According to the ITEP Study
According to ITEP, the poorest fifth of Americans would receive a total income boost of $3,590 via the three programs outlined under Biden’s proposed stimulus plan. This specific bracket of Americans workers earn an average of $10,900 annually, ITEP added.
Meanwhile, CBS News reported that the middle 20% of households “would be similar, at $3,370, but would have a smaller proportional impact because of their higher average income in that quintile, at $51,500 per year.”
ITEP’s findings were also echoed in a similar study by the Tax Policy Center.
The Center projected on February 10 that the bottom one-fifth of American workers would see a boost on an after-tax basis of 20%, similar to the projections of ITEP. The organization also determined that households bringing in $91,000 annually or less would receive two-thirds of the proposed benefits, while the top 20% would see only roughly 11%.
Under the Democrats’ Plan to Expand the CTC, an Additional 4.1 Million Children Would Be Lifted Out of Poverty, According to the Center on Budget & Policy Priorities
Under Biden’s proposed plan, the CTC would be expanded to $3,600 for children up to 6 years old and $3,000 for children up to 17, CBS News said.
CBS reported that the current limit for the CTC is $2,000 for “many families, although the benefits are limited for the poorest families.”
The Center on Budget and Policy Priorities, a nonpartisan research and policy institute, estimated that the new stimulus plan would lift an extra 4.1 million children out of poverty by expanding the CTC. The Center explained how the measure would make the tax credit payable on a monthly basis, instead of annually when taxes are filed.
“Permanently enacting this historic proposal — along with the EITC provision which would stop the federal tax code from taxing millions of childless adults into or deeper into poverty — would be a landmark achievement and should be an urgent priority once this temporary legislation is enacted,” the CBPP said.