The 2017 tax reform legislation suspended the personal exemption for tax years beginning after 2017 and before 2026, and expanded the child tax credit in an effort to provide some additional assistance to lower and middle class families with children.
Many felt that the expanded child tax credit did not do enough to help lower income taxpayers, and that the overall tax reform package was skewed toward providing tax cuts for the rich. Possibly in response to this perceived unfairness, one California Democratic Senator has proposed a new tax credit, named Livable Income for Families Today (or LIFT) designed to help lower and middle class taxpayers regardless of whether they have children. The new credit is part of a proposal entitled LIFT the Middle Class Act, which was introduced late in 2018.
We asked Professors Robert Bloink and William Byrnes, who are affiliated with ALM’s Tax Facts, and hold opposing political viewpoints, to share their opinions about how the new credit might work, and whether it would be a positive impact for taxpayers in general.
Below is a summary of the debate that ensued between the two professors.
Bloink: This new credit is a step in the right direction toward providing equal tax benefits for taxpayers regardless of whether they have children, and actually provides a benefit to the people who need it the most. The 2017 tax reform overhaul was dramatically skewed toward providing additional financial benefits for wealthy taxpayers, and this credit would provide much needed relief for the middle class.
Byrnes: The new LIFT credit is unlikely to pass, because it would be extremely expensive to implement. It’s just unworkable, and also unnecessary because we already have tax credits designed to do exactly what this credit purports to do—the earned income tax credit and the child tax credit, both of which remained intact or were even expanded to help the middle class under the 2017 tax reform legislation.