Romney Child Tax Credit Plan Would Leave Many Maryland Families Worse Off
The federal child tax credit (CTC) improves quality of life for millions of children across the United States, and expansions under the American Rescue Plan Act (ARPA) demonstrated the power of a more robust CTC to protect kids from hardship. A proposal from Utah Sen. Mitt Romney would redesign the CTC and reinstate certain lapsed benefits of the ARPA expansion. However, the plan has serious shortcomings that would hit children in Maryland harder than those in many other states:
- The Romney plan would benefit only about half as many Maryland children in low- and middle-income families as the ARPA expansion.
- The Romney plan would actually increase total tax responsibilities for low- and middle-income families in Maryland.
- Nationwide, Black families would see their average taxes slightly increase under the Romney plan, compared to a sizable reduction under the ARPA expansion.
While the Romney plan is not entirely without merit, lawmakers should improve it to provide more help to more children, more equitably.
Here's how the Romney plan would change the current CTC, and how it differs from the expired ARPA expansion that was in effect last year:
| Current CTC | Romney Plan | ARPA Expansion | |
| Maximum benefit per child
0-5 years old |
$2,000 | $4,200 | $3,600 |
| Maximum benefit per child
6+ years old |
$2,000 | $3,000 | $3,000 |
| Pregnancy benefit
(Maximum) |
None | $2,800 | None |
| Maximum age | 16 | 17 | 17 |
| Monthly payments | No | Yes | Yes |
| Low-income limitations | · Families with annual earnings under $2,500 are not eligible.
· Most low- and middle-income families can access only a partial benefit. |
· Families with no income are not eligible.
· Families with annual earnings under $10,000 can access only a partial benefit. |
None. Families with the lowest incomes receive the full benefit. |
| Revenue offsets | N/A | Other tax changes in the Romney plan pay for 92% of the CTC changes. These tax increases hit working families especially hard:
· Earned income tax credit reductions for workers with children · Repeal of head-of-household filing status (single parent tax increase) · Child care tax credit repeal · State and local tax deduction repeal |
Tax reforms included in the House-passed Build Back Better plan could substantially offset the cost of reinstating the ARPA expansion with minimal effect on working families.
For example, the bill’s personal income tax reforms (which were not included in the Inflation Reduction Act) would offset 70% of the CTC expansion’s cost with essentially no impact on Maryland families taking home less than $300,000 per year. |
Policy choices in the Romney proposal would reduce the CTC’s power to support children and would leave many children worse off than they are today:
- The Romney plan would boost family incomes for 330,000 Maryland children in low- and middle-income families (the 60% of Maryland families who take home less than $95,000 per year), compared to 643,000 low-and middle-income children who benefitted under the ARPA expansion.
- The Romney plan would increase taxes or reduce benefits for 289,000 Maryland children in low- or middle-income families. Democratic lawmakers have advanced revenue options (including several in the House-passed Build Back Better Act) that would offset most of the cost of reinstating the ARPA expansion with minimal impact on working families.
- Even for most of the families the Romney plan helps, its net benefits pale in comparison to the ARPA expansion. For example, among Maryland families that would benefit under the Romney plan and take home less than $15,000 per year, the average benefit would be only one-fifth as large as the average benefit under the ARPA expansion.
- The Romney plan targets single parents for especially large revenue offsets. Nationwide, well over 40% of low- and middle-income head-of-household filers (primarily single parents, annual income less than $85,000) would see their net taxes increase under the Romney plan. This would put more obstacles in front of many families that already struggle to make ends meet.
Despite its serious flaws, the Romney CTC plan could be the foundation of a policy increasing economic security for thousands of children and families across Maryland and nationwide. Lawmakers should work to improve the plan:
- Eliminate the phase-in, enabling the families who need the most help to access the full benefit.
- Eliminate provisions that harm families with children, such as EITC cuts, head-of-household repeal, and child care benefit cuts.
- Eliminate other administrative hurdles and arbitrary restrictions in the Romney plan.
- Offset the cost with tax reforms that ask more of the wealthiest individuals and corporations, such as several included in the House-passed Build Back Better Act.
