H.R.2763 - American Family Act (119th Congress)
Summary
H.R.2763, the American Family Act, proposes to amend the Internal Revenue Code of 1986 to establish a refundable child tax credit with monthly advance payments. The bill introduces a new section, 24A, which outlines the monthly child tax credit and its calculation based on the age of the child and the taxpayer's modified adjusted gross income. It also includes provisions for inflation adjustments and eligibility requirements.
Additionally, the bill amends section 7527A to detail the monthly payments of the child tax credit, including the determination of reference months and taxable years, methods for providing information to establish eligibility, and resolution of competing claims. The legislation also addresses the application of the credit in U.S. possessions and includes measures to prevent improper claims and reconcile advance payments with the actual credit amount.
Finally, the bill terminates the existing annual child tax credit under section 24 for taxable years beginning after December 31, 2024, and makes conforming amendments to other sections of the Internal Revenue Code to reflect the changes.
Expected Effects
The American Family Act aims to provide financial support to families with children through monthly tax credits. This could lead to increased spending and reduced poverty among eligible families. The shift from an annual to a monthly credit aims to provide more consistent financial assistance throughout the year.
Potential Benefits
- Provides direct monthly financial assistance to families with children, potentially reducing poverty and improving financial stability.
- Offers increased credit amounts for younger children, recognizing the higher costs associated with their care.
- Includes inflation adjustments to maintain the real value of the credit over time.
- Establishes clear eligibility criteria and procedures for resolving competing claims, promoting fairness and preventing fraud.
- Integrates provisions for U.S. possessions, ensuring that residents of these areas also benefit from the credit.
Potential Disadvantages
- The income limitations may exclude some middle- and upper-middle-class families from receiving the full benefit.
- The complexity of the eligibility requirements and reconciliation process could create administrative burdens for both taxpayers and the IRS.
- Potential for improper claims and fraud, despite the measures included in the bill.
- The termination of the existing annual child tax credit could negatively impact families who prefer a lump-sum payment.
- The reliance on presumptive eligibility and government programs for automatic enrollment may raise privacy concerns.
Most Disadvantaged Areas:
Constitutional Alignment
The American Family Act aligns with the Constitution's mandate to "promote the general Welfare" (Preamble). The Sixteenth Amendment grants Congress the power to lay and collect taxes on incomes, which provides the constitutional basis for the tax credits and payments outlined in the bill. The bill's provisions for U.S. possessions also align with Congress's power to legislate for these territories (Article IV, Section 3, Clause 2).
However, some may argue that the expansion of the welfare state through these tax credits could be seen as an overreach of federal power. The complexity of the bill and the potential for government oversight of family finances could also raise concerns about individual liberty and privacy, although these concerns are not explicitly addressed in the Constitution.
Overall, the bill appears to be within the constitutional powers of Congress, particularly given the broad interpretation of the General Welfare Clause and the Sixteenth Amendment.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).