Summary: In early February 2021, Senator Mitt Romney (R-UT) proposed the Family Security Act to consolidate several forms of federal child assistance into a single, expanded child benefit to be administered through the Social Security Administration (SSA).
The act would provide a fully-refundable child allowance of $4,200 annually ($350 per month) per child ages 0-5, and $3,000 annually ($250 per month) per child ages 6 through 17. The credit would phase out at a rate of $50 for every additional $1,000 of income above the phase out threshold ($200K single / $400K joint).
The act would also simplify the existing structure of the Earned Income Tax Credit (EITC), so that the value of the credit is determined by filing status (married or single), and whether or not there are any eligible dependents (the number of dependents would no longer affect the value of the credit).
Other proposed changes to the tax code include elimination of head of household status, elimination of the child and dependent care credit (CDCTC), and elimination of the State and Local Tax (SALT) deduction.
PWBM projects that this proposal would cost $283 billion over the budget window, not including proposed changes to SNAP eligibility and elimination of TANF.
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | TOTAL | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Child Allowance | -94 | -125 | -128 | -135 | -139 | -198 | -219 | -227 | -233 | -238 | -1736 |
| EITC reform | 14 | 19 | 19 | 19 | 20 | 20 | 20 | 21 | 21 | 22 | 195 |
| Elimination of Head of Household status | 14 | 19 | 19 | 20 | 20 | 15 | 13 | 13 | 14 | 14 | 161 |
| CDCTC elimination | 4 | 5 | 5 | 5 | 5 | 5 | 5 | 6 | 6 | 6 | 52 |
| SALT deduction elimination | 20 | 26 | 27 | 27 | 28 | 141 | 182 | 191 | 197 | 204 | 1044 |
| Total* | -42 | -56 | -58 | -63 | -65 | -17 | 2 | 3 | 5 | 8 | -283 |
*The Family Security Act also proposes changes to SNAP eligibility along with elimination of TANF, not included in these estimates
| Income group | Average tax change | Share with a tax cut | Average tax cut for those with a tax cut | Share with a tax increase | Average tax increase for those with a tax increase | Percent change in after tax income | Share of tax change | Share of federal taxes paid | |
|---|---|---|---|---|---|---|---|---|---|
| Before tax change | After tax change | ||||||||
| Bottom quintile | -$400 | 35% | -$1,340 | 4% | $1,645 | 8% | 36% | 0% | -1% |
| Second quintile | -$315 | 28% | -$2,375 | 18% | $1,935 | 1% | 21% | 3% | 3% |
| Middle quintile | -$275 | 22% | -$2,600 | 19% | $1,560 | 1% | 18% | 11% | 11% |
| Fourth quintile | -$285 | 23% | -$2,930 | 24% | $1,685 | 0% | 16% | 19% | 19% |
| 80-90% | -$640 | 35% | -$3,160 | 28% | $1,715 | 1% | 15% | 15% | 15% |
| 90-95% | -$460 | 36% | -$3,220 | 35% | $2,060 | 0% | 5% | 11% | 11% |
| 95-99% | $510 | 23% | -$3,120 | 50% | $2,495 | 0% | -4% | 16% | 17% |
| 99-99.9% | $2,235 | 0% | $ - | 73% | $3,160 | 0% | -4% | 13% | 13% |
| Top 0.1% | $2,440 | 0% | $ - | 77% | $3,300 | 0% | -1% | 12% | 12% |
Note: “Income” is defined as AGI plus: above-the-line deductions, nontaxable interest income, nontaxable Social Security benefits, nontaxable pensions and annuities, employer-side payroll taxes, and corporate liability. Note that this definition excludes transfer income and thus understates low-income tax units' income.