President Biden’s Proposed American Family Plan – a few more details
Child care. Families with incomes up to 1.5 times a state’s median income would be eligible for federal subsidies. Families would pay on a sliding fee scale and the federal government would subsidize the rest. At the top incomes, the cap on family responsibility would be 7% of family income. The cost of this element of the American Family Plan is $225 billion over 10 years. Wages of child care workers under this element would be increased to $15 an hour.
Community college. Two years of community college would be free. The federal government would pay 75% of the average tuition costs if states pay the other 25%. Cost of this element of the American Family Plan is $109 billion over 10 years.
Improving Pell grants. Pell grant awards for 7 million students’ college tuitions would be increased by $1,400. Cost is $85 billion over 10 years.
Paid medical and family leave. Twelve weeks of paid medical and family leave, phased in over 10 years. “The partial wage replacement would apply to individuals who wanted “to take time to bond with a new child, care for a seriously ill loved one, deal with a loved one’s military deployment, find safety from sexual assault, stalking or domestic violence, heal from their own serious illness or take time to deal with the death of a loved one. Workers would receive up to $4,000 a month through the national leave program, with a minimum of two-thirds of their wages replaced. The White House estimates the program will cost $225 billion over 10 years.”
Universal pre-school available for all three and four year olds. The federal and state governments would split the costs 50/50. In states that do not participate; the federal match would be available to participating local governments. Five million children would qualify. The savings to families is an average of $13,000 per child. The federal cost over 10 years is $200 billion.
Free and reduced cost meals during the summer. This would help feed 29 million children eligible for the program during the school year over the course of the summer. Cost is $25 billion over ten years.
Expanded child tax credit extended through 2025. “The American Families Plan would maintain the new enhanced child tax credit for another four years, and it would make it fully refundable permanently.
“Families with children under the age of 6 will receive $3,600 per child, while those with kids between the ages of 6 and 17 will receive $3,000 for each child for 2021. That’s up from a maximum of $2,000 per child under age 17.
“The enhanced portion of the credit is available for single parents with annual incomes up to $75,000, heads of households earning up to $112,500 and joint filers making up to $150,000 a year.”
ACA Premium Assistance Increased. The ACA provided refundable tax credits (or premium assistance) to individuals and families buying their health coverage through state and federal Exchanges. They were targeted to individuals with incomes less than 400% of FPL ($106,000 for a family of four), and they were sliding fee scale so that those with lower incomes got the most assistance. The American Relief Act eliminated the cap at the top end, increased the level of assistance to all buying through the Exchanges to make their premiums more affordable for two years, and eliminated premiums at the low end. The American Families Act would make those improvements permanent. Cost is $200 billion over 10 years.
Earned Income Tax Credits Increased. The American Relief Act “bolstered the credit (EITC) by nearly tripling the maximum credit and extending eligibility to more childless workers. The minimum age to claim the credit will be reduced to 19, from 25, and the upper age limit will be eliminated.” The American Families Act would make these improvements permanent.
Child Care Tax Credits Increased. Under the American Relief Act, “families can receive a tax credit for as much as half of their spending on qualified child care for children under age 13, up to a total of $4,000 for one child or $8,000 for two or more children. Parents making less than $125,000 annually are eligible for the full credit, while those earning between $125,000 and $400,000 will receive a partial credit.” The American Families Act would make these improvements permanent.
The cost of the tax changes is $800 billion over ten years, and the cost of the program improvements is $1 trillion over ten years. They are offset (paid for) by an increase in the top income tax rates and an increase in the capital gains tax for those earning more than a million dollars a year.
Prepared by: Lucien Wulsin
Dated: 4/28/21
Reference: https://www.cnn.com/2021/04/28/politics/american-families-plan/index.html