19 January 2024
WASHINGTON — For the first time ever, Minnesota this year will offer families a child tax credit to state income tax filers. Those taxpayers may soon have a new federal child tax credit, too.
There is a bipartisan agreement in the U.S. House and U.S. Senate that would include the revival of an expansion of the child tax credit — and the return of expired business tax breaks.
The federal child tax credit was expanded in 2021 to $3,000 per child (and $3,600 per children under the age of six) to help families cope with the economic fallout of the pandemic.
Half of the increased credit was paid in the form of monthly checks and the rest was claimed on tax returns the following year. The dramatic boost in the child tax credit was attributed to a significant drop in poverty rates among children.
But the expanded credit ended in 2022. Several studies determined that the end of the credit caused child poverty to more than double, as referenced in this Center on Budget and Policy Priorities piece.
The current federal child tax credit favors higher-income families.
Under current law, joint filers who earn less than $400,000 and individual filers who earn less than $200,000 can claim a credit of up to $2,000 per child on their federal income tax returns. But the credit’s cap for low-income families is $1,600 and many of these filers pay too little in taxes to be able to claim the full credit.
The $78 billion tax package that was agreed to this week would, for the first time, index the child tax credit to inflation.
But the biggest change is that low-income families would be able to take full advantage of the credit because it would be capped at the same amount as wealthier families and be refundable.
Gov. Tim Walz weighed in on the effort to boost the federal child tax credit in a post on X this week.
“The child tax credit I signed into law will significantly cut child poverty in Minnesota by investing directly in the families who need help the most,” the governor said. “Congress should follow Minnesota’s lead and expand the child tax credit at the federal level.”
The tax deal would also boost the low-income housing tax credit that incentivizes developers to build new affordable-housing units, which could lead to as many as 200,000 new units for low-income families.
Lawmakers are hoping to pass the tax package so the new changes in tax law can take effect in time for this year’s tax filing season. But that’s a long shot. Although there is a bicameral, bipartisan agreement on the tax deal, approval is not certain because some GOP lawmakers are cool to the child tax credit provision.
A federal shutdown is averted, again
Congress scrambled to pass a short-term spending bill that would avoid a partial government shutdown ahead of a snowstorm expected to wallop Washington, D.C., on Friday.
The short-term bill, called a continuing resolution, or CR, will continue to fund government agencies at the same level as the last federal fiscal year, which ended Sept. 30.
Since the end of the fiscal year, Congress has narrowly averted shutdowns of the federal government by approving stop-gap measures. The CR’s were needed because lawmakers in the House and Senate can’t agree on a budget.
The latest continuing resolution — approved by both chambers on a bipartisan basis on Thursday — would avert a partial shutdown of the federal government that was slated to occur when another short-term funding bill expired at about midnight on Friday. Those agencies, which include the Food and Drug Administration and the Agriculture Department, now are funded until March 1. The rest of the federal government would be funded until March 8.
Except for Rep. Tom Emmer, R-6th District, every other Minnesota Republican — Reps. Brad Finstad, Michelle Fischbach and Pete Stauber — voted against the short-term measure. All of Minnesota’s Democrats voted for it.
Congress is likely to continue to kick the can down the road, even as these bipartisan short-term solutions have put House Speaker Mike Johnson in a tough spot.
After saying in November that he would not pass any more short-term funding bills, Johnson has been forced to abandon that plan, infuriating conservative hardliners in the House. These mostly Freedom Caucus members seek deeper cuts to the federal budget than what the new CR would establish, which is a $16 billion reduction.
The new CR has prompted some House Republicans, including Rep. Marjorie Taylor Greene, R-Georgia, to threaten to boot Johnson from his leadership post.
House rules allow any member of the U.S. House to call for “motion to vacate,” or a vote on whether to keep a House Speaker, a procedure that was used to oust former House Speaker Kevin McCarthy, R-California.
This and that
Sen. Tina Smith, D-Minnesota, will vault into a high-profile role as a headliner in next week’s Washington Press Club Foundation annual Congressional Dinner.
The gala brings D.C.-based journalists and lawmakers together for a night of off-the-record revelry. Smith and Rep. Lisa McClain, R-Michigan, the evening’s other headliner, will deliver remarks and jokes in a roast-like atmosphere.
“As part of the event’s bipartisan tradition, the congressional keynote speakers will share their take on Capitol Hill life before a sold-out audience of journalists and their congressional guests,” a statement from the press club foundation said.
Meanwhile, Minnesota dairy farmers are getting nervous that the U.S. Agriculture Department’s Farm Service Agency had not yet announced when the 2024 enrollment period for a key dairy program will start.
So, Finstad led a group of 11 lawmakers who tried to do something about it this week.
The Dairy Margin Coverage Program is like an insurance plan, offering protection to dairy producers when the difference between the milk prices and the average feed price falls below a certain dollar amount selected by that farmer. Last year, the enrollment period for the plan began on Oct. 17, 2022, and ended on Jan. 31, 2023.
In a letter to USDA Secretary Tom Vilsack, Finstad and 10 other lawmakers urged that the enrollment period be opened soon and said delays “only cause frustration and economic strain for our producers.”
“Now, as we are nearly halfway through January, there continues to be no indication given to producers of when they will be eligible to select their [Dairy Margin Coverage] coverage level for 2024,” the lawmakers wrote. “This delay in DMC enrollment coupled with the already unpredictable nature of the industry is concerning for the farm economy and the constituents we represent. Transparency and communication are needed from USDA as the enrollment period continues to be delayed.”
As Rep. Dean Phillips stumps for the White House in New Hampshire, the field to succeed him in representing the 3rd congressional district in Congress became more crowded this week.
The latest entrant in the race is Richard Painter, a law professor at the University of Minnesota who is running as a Democrat, but has served as an ethics officer in the George W. Bush administration.
Painter said in email the focus of the campaign will be clean water and clean politics.
“Former Governor Arne Carlson has expressed his support and encouragement for my running,” he said. “We are both very concerned about the threat of sulfide mining near the Boundary Waters and the impact of mining industry money in the state Legislature and in Washington.”
Other Democrats running for the 3rd District seat are Ron Harris, who served as the chief resilience officer in Minneapolis, and Kelly Morrison, an ob-gyn who has promoted greater access to health care in the state legislature.
The race for an open seat has also attracted a couple of Republicans — retired attorney Quentin Wittrock and businessman Blaize Harty.
Your questions and comments
I continued to receive letters this week about a story on the problems with mail delivery in Minnesota. The letters were from both postal customers who were unhappy with delayed and lost mail and postal employees who were frustrated by understaffing and long hours.
Here’s a note from one reader:
“It’s not just rural mail that isn’t being delivered. We live in Duluth — in the city limits — and haven’t received mail since Wednesday. (I am writing this on Sunday.) The post office’s notification email to us on Thursday revealed several bills, our new license tabs, and something from the MN Tax Department (had not been delivered.) All important to us. If this mail is delivered at all, it won’t be until Tuesday because of the MLK holiday.
In December, our Verizon bill was not received until December 21, with a due date of December 25. We pay by check and ended up with a late fee as Verizon did not receive our payment until January 2. (They waived the fee.)”
Another reader had a comment about a piece on Minnesota Attorney General Keith Ellison’s victory at the U.S. Supreme Court last week. The high court declined to hear an appeal from the oil industry seeking a change of venue for Minnesota’s lawsuit alleging the industry deceived the public about climate change.
“I had no idea that AG Ellison had sued big oil, in my eyes just another way to jack up the cost,” the reader said.
Please keep your comments, and any questions, coming. I’ll try my best to respond. Please contact me at [email protected].