The American Family Act (AFA) is a legislative proposal aimed at improving financial support for families in the United States. It seeks to expand and enhance the existing child tax credit system to offer greater economic stability to low- and middle-income families. The primary goal of the Act is to reduce child poverty and assist families in meeting the rising costs of raising children. By making child tax credits more accessible and increasing the amount families can receive, the American Family Act is designed to improve the financial wellbeing of millions of American families.
The Background of the American Family Act
The American Family Act was first introduced by Senators Michael Bennet and Sherrod Brown in 2017. The lawmakers created the bill with the intention of tackling child poverty, which has been a persistent issue in the U.S. for decades. Families, especially those with lower incomes, face mounting financial pressures from housing, healthcare, education, and general living costs. These economic challenges often leave parents struggling to provide for their children.
The American Family Act builds on the Child Tax Credit (CTC) that has existed since 1997. Over time, the CTC has become an important part of the U.S. tax system, offering financial relief to families. However, many critics argue that the CTC has not done enough for families most in need. The American Family Act seeks to address this gap by expanding the CTC’s coverage and increasing the amount of support families receive.
What the American Family Act Proposes
The American Family Act proposes several key changes to the current child tax credit system. These changes are intended to provide better support to families with children, especially those with lower incomes.
Expanded Child Tax Credit
Under the American Family Act, the Child Tax Credit would be significantly expanded. Currently, families can receive up to $2,000 per child annually through the CTC. The American Family Act proposes increasing this amount to:
$3,600 per child under the age of six.
$3,000 per child aged six to seventeen.
This increase in the tax credit amount is intended to help families cope with the high costs of raising children, including childcare, healthcare, and education.
Monthly Payments
One of the most significant changes proposed by the American Family Act is the introduction of monthly payments. Rather than receiving the child tax credit as a lump sum at the end of the tax year, families would receive monthly installments. For example, a family eligible for a $3,600 tax credit would receive $300 per month. This change allows families to better manage their monthly expenses, rather than waiting for a single annual payout.
Fully Refundable Tax Credit
Another important feature of the American Family Act is that the child tax credit would become fully refundable. Currently, many low-income families are not eligible to receive the full amount of the child tax credit because it is only partially refundable. The American Family Act would make the credit fully refundable, meaning that even families with very low incomes, who do not owe federal taxes, would still be eligible for the full credit.
See also: What Is Family Law In The UK?
The Impact of the American Family Act on Child Poverty
One of the main goals of the American Family Act is to reduce child poverty in the United States. According to research conducted by the Center on Poverty and Social Policy at Columbia University, the American Family Act could cut child poverty by nearly half if implemented. By providing families with additional financial resources, the Act aims to lift millions of children out of poverty.
Child poverty has long-term negative effects on children’s health, education, and overall well-being. Children growing up in poverty are more likely to face challenges in school, have health problems, and experience emotional and behavioral issues. By reducing child poverty, the American Family Act could lead to better outcomes for children and families across the country.
Eligibility for the American Family Act
Under the American Family Act, eligibility for the expanded child tax credit would be based on income. The Act proposes that families with household incomes of up to $150,000 for married couples and $112,500 for single parents would be eligible to receive the full benefit of the expanded credit.
Families with higher incomes would still be eligible for the child tax credit, but the amount of the credit would begin to phase out as household income increases. This ensures that the families most in need of financial support receive the most significant benefits under the Act.
How the American Family Act Compares to the Child Tax Credit
The American Family Act represents a major shift from the current child tax credit system. Under the existing system, families can receive up to $2,000 per child annually, with only up to $1,400 being refundable for low-income families. Additionally, the current child tax credit is paid out as a lump sum, rather than in monthly payments.
The American Family Act would significantly increase the amount of financial support available to families, make the credit fully refundable, and introduce monthly payments. These changes are intended to provide more consistent and reliable financial support to families, helping them meet their daily needs and reduce the burden of raising children.
The American Rescue Plan and the American Family Act
The American Rescue Plan, passed in 2021, included temporary expansions to the Child Tax Credit that closely resemble the proposals in the American Family Act. The Rescue Plan increased the credit amount to $3,600 for children under six and $3,000 for children aged six to seventeen. It also made the credit fully refundable and introduced monthly payments for eligible families.
These temporary changes had a significant impact, helping millions of families across the country. However, the expansions included in the American Rescue Plan were only temporary and were set to expire at the end of 2021. The American Family Act seeks to make these changes permanent, ensuring that families continue to receive the financial support they need.
Support for the American Family Act
The American Family Act has received widespread support from a variety of organizations, including anti-poverty advocates, child welfare organizations, and labor unions. Many argue that the Act would have a transformative effect on child poverty and provide much-needed relief to struggling families.
Supporters of the American Family Act point to the success of similar programs in other countries. For example, Canada’s child benefit program provides monthly payments to families based on their income and the number of children in their household. This program has been credited with significantly reducing child poverty in Canada. Proponents of the American Family Act believe that similar results could be achieved in the United States.
Criticism and Concerns
While the American Family Act has garnered significant support, it has also faced criticism. Some critics argue that the expanded child tax credit could lead to increased government spending and higher deficits. Others are concerned that the monthly payments could disincentivize work, as families might rely on the payments rather than seeking employment.
There are also concerns about the administrative burden of implementing monthly payments. The U.S. tax system is not currently set up to handle monthly disbursements, and some worry that the process could lead to delays and errors in payments.
The Fut ure of the American Family Act
As of now, the American Family Act has not been passed into law. However, the success of the temporary expansions included in the American Rescue Plan has renewed interest in making these changes permanent. Lawmakers continue to debate the merits of the American Family Act and similar proposals, and the future of the Act remains uncertain.
If the American Family Act were to be enacted, it could represent a significant shift in how the U.S. government supports families. By providing more generous and consistent financial assistance to families with children, the Act has the potential to reduce child poverty and improve the well-being of millions of children across the country.
Conclusion
The American Family Act is a bold proposal aimed at addressing the financial challenges faced by families in the United States. By expanding the child tax credit, making it fully refundable, and introducing monthly payments, the Act seeks to provide greater economic security for families and reduce child poverty. While the Act has faced criticism, it has also garnered widespread support from advocates for children and families. If implemented, the American Family Act could have a transformative impact on the lives of millions of American families, helping to ensure that every child has the opportunity to grow up in a financially stable and supportive environment.