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THE POLITICS OF POVERTY

Last week, the House of Representatives passed a $78 billion tax bill that included, among other things, an expansion of the existing child tax credit. But this rare example of bipartisan compromise has hit a major political roadblock in the Senate.

Tom Williams/CQ-Roll Call/Getty Images

If you don’t recall the history of the child tax credit — and unless you’re an economist or accountant, why would you? — it was an idea that arose out of the 1980s tax reform discussions, in which advocates noted that most other wealthy countries provided some form of child benefit to support families. There was some back-and-forth between Democrats and Republicans (President Bill Clinton proposed an $800 per child credit; the Republican-led Congress countered with a $500 one) but the CTC finally became law as part of the Taxpayer Relief Act of 1997. Congress has significantly increased it several times under both Democrat and Republican administrations, and always with bipartisan support.

In its simplest form the CTC works like this: families with children are able to reduce the amount of taxes they owe by up to a certain amount (currently $2,000 per child.) The credit phases out for high-income earners ($200,000 for a single parent; $400,000 for a married couple filing jointly) because wealthy families presumably don’t need the extra money.

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