Sen. Mitt Romney has proposed a new refundable tax credit for parents of young children and an expansion of the existing child tax credit, a proposal meant to provide relief for families on a bipartisan basis, but one that will reignite debate among conservatives.
The plan, introduced with Democrat Michael Bennet of Colorado as part of end-of-year legislating, would give families a new credit of $2,500 for each child up to the age of 6, with the first $1,500 fully refundable regardless of income (up to $400,000 for couples), meaning that families with no income tax liability could receive the credit as a check from the government.
Families would still get the existing $2,000 credit for children between 6 and 17, but the law would be reformed to allow more low-earning families to get the break as a refund.
Republicans have long disagreed about the merits of larger child tax credits. Many are skeptical of refundable tax credits in general, while others argue that tax code reforms should focus on lowering rates for the purpose of boosting economic growth rather than providing relief via tax credits. In 2017, for example, most Senate Republicans joined with Democrats to block a tax proposal from Sens. Marco Rubio of Florida and Mike Lee of Utah that would have expanded the refundable portion of the child tax credit.
The Romney-Bennet measure introduced Sunday would offset the cost of the larger child credit by overhauling a section of the tax code that lowers capital gains taxes on assets given as inheritances. Today, the capital gains liability for such an asset is measured based on its appreciation since the time of the inheritance, not including appreciation that took place during the decedent’s life. Romney and Bennet would remove that feature of the tax code, known as “step-up in basis,” a move sure to be criticized by supply-side conservatives.
The two senators also call for a permanent repeal of a medical device tax opposed by both parties that was created by Obamacare.
The bill would have a full package of technical fixes for the 2017 GOP tax law, including a change to a drafting error that is preventing restaurants and retail stores from writing off the full costs of their renovations the year they are made, a priority for the Trump administration.
Romney, a Utah Republican and 2012 presidential candidate, and Bennet, a 2020 Democratic presidential candidate, teamed up to put forth the proposal just as Congress is scrambling to reach an agreement on how to fund the federal government.
“With its focus on helping families raising young children, protecting medical innovation for patients, and bringing certainty to workers and businesses, our plan should be considered on merit alone,” Bennet and Romney said in a news release.
“And while the intent of our proposal is not to address every aspect of the current negotiations, we believe it is a compromise that can help clear a path forward and break the current logjam,” the senators added.
