Cortez Masto Seeks to Expand Important Tax Credit to Put Money Back in Pockets of Workers

Washington, D.C. – U.S. Senator Catherine Cortez Masto (D-Nev.) cosponsored legislation that would help expand two anti-poverty tax credits that help put money back in the pockets of hardworking Nevadans and their families. The Working Families Tax Relief Act expands access to and the value of the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), and ensures that no worker can be taxed into poverty by the federal tax system. 

“It is appalling that hardworking Nevadans face the real risk of being taxed into poverty,” said Senator Cortez Masto. “By modernizing the EITC and the CTC, Nevadans will be better protected from current weaknesses in the law that could have dire consequences for countless Nevada families. Our federal tax system should not cause unfair harm to hardworking families. I will continue to fight for a fair federal tax system that does not prey on those who are the most vulnerable.”

Together, the EITC and CTC help lift Americans out of poverty. The EITC is a refundable tax credit for low-income Americans that encourages work and helps families make ends meet. The CTC is available for taxpayers with children in the amount of up to $1,000 per child under age 17. In 2015, the CTC lifted 1.6 million children out of poverty.

The Working Families Tax Relief Act would do four things:

1. Expand EITC for Childless Workers: Workers who do not claim children are the sole group that the federal tax system can tax into poverty or deeper into poverty. There is a small credit for workers not raising children in the home, but the maximum credit amount is $510 and the credit begins to phase out at $8,340 and phases out completely at $15,010. In addition, all workers that do not claim children and are younger than 25 are ineligible for the EITC. The result is that the EITC for a full-time, minimum-wage worker not claiming children is $27 – making workers who do not claim children the only group of taxpayers that can be taxed into poverty. The Working Families Tax Relief Act reduces the age limit to qualify for the EITC from 25 to 21 and expands the size of the credit so the same full-time, minimum wage worker would earn a refundable credit of approximately $913. 

1. Strengthen the Child Tax Credit for Families with Young Children: The bill builds on the proven success of the CTC to lift children out of poverty. The legislation will focus on the most vulnerable children by allowing taxpayers to claim a refundable credit equal to 45 percent of each dollar earned up to a maximum credit of $3,000 per-child under six years of age.

1. Index the CTC to inflation: A recent study from Columbia University concluded that if the CTC is not indexed, 750,000 children under 17 and their families will fall below the poverty line by the end of the decade. The bill would index the maximum CTC and the income thresholds at which the credit begins to inflation.

1. Make it easier to claim the EITC: The bill includes a pair of bipartisan measures, originally proposed by the George W. Bush Administration, designed to simplify and clarify who can claim a child. The first proposal simplifies the complicated rules for how parents who are separated can claim the EITC. The second proposal allows filers who live with a qualifying child, but do not claim the child for the EITC, to claim the childless EITC proposed in the bill.

The bill was introduced by U.S. Senator Sherrod Brown (D-Ohio) and also cosponsored by U.S. Senators Dick Durbin (D-Ill.), Michael Bennet (D-Colo.), Chuck Schumer (D-N.Y.), Ron Wyden (D-Ore.), Pat Leahy (D-Vt.), Dianne Feinstein (D-Calif.), Patty Murray (D-Wash.), Jack Reed (D-R.I.), Bill Nelson (D-Fla.), Tom Carper (D-Del.), Debbie Stabenow (D-Mich.), Maria Cantwell (D-Wash.), Robert Menéndez (D-N.J.), Ben Cardin (D-Md.), Bernie Sanders (I-Vt.), Bob Casey (D-Pa.), Claire McCaskill (D-Mo.), Amy Klobuchar (D-Minn.), Sheldon Whitehouse (D-R.I.), Jon Tester (D-Mont.), Tom Udall (D-N.M.), Jeanne Shaheen (D-N.H.), Mark Warner (D-Va.), Jeff Merkley (D-Ore.), Kirsten Gillibrand (D-N.Y.), Al Franken (D-Minn.), Chris Coons (D-Del.), Richard Blumenthal (D-Conn.), Brian Schatz (D-Hawaii), Tammy Baldwin (D-Wis.), Chris Murphy (D-Conn.), Mazie Hirono (D-Hawaii), Martin Heinrich (D-N.M.), Angus King (I-Maine),  Tim Kaine (D-Va.), Elizabeth Warren (D-Mass.), Ed Markey (D-Mass.), Cory Booker (D-N.J.), Gary Peters (D-Mich.), Chris Van Hollen (D-Md.), Tammy Duckworth (D-Ill.), Maggie Hassan (D-N.H.), and Kamala Harris (D-Calif.).

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