Clinton Proposes New Tax Credit

Hillary Clinton AP

Democrat Hillary Clinton, hoping to win over skeptical and struggling voters, is proposing a new tax cut that would give an additional $1,000 a year or more to millions of parents of young children.

The timing of the proposal appeared to be calculated to deliver maximum political benefit and to appeal to voters who have turned away from her Republican rival, Donald Trump, but haven't embraced Mrs. Clinton.

It's part of a larger plan for middle-class tax cuts. The new plan would double the child tax credit to $2,000 per child for families with children ages 4 and under. The Democratic presidential nominee also would change the rules so more people with particularly low incomes would benefit, even if they don't owe income taxes.

The new Clinton tax break is structured as a refundable tax credit, which delivers the biggest benefits to lower- and middle-class families, including those who owe no income taxes.

That's a contrast to Mr. Trump's child-care plan, which delivers the bulk of its benefit as a deduction, which is worth more to taxpayers in higher tax brackets.

The Clinton campaign estimated the cost of the proposal at $150 billion to $200 billion over 10 years and said it would be funded by higher taxes on the wealthy already put forth.

"Rich people ought to be paying more federal income taxes to pay their fair share for our country," Mrs. Clinton said Monday at a rally in Detroit.

The Trump plan would increase taxes on about eight million families, according to one estimate, because he repeals certain tax benefits particularly for single parents. The Trump campaign disputes this conclusion and said it would ensure no household pays more.

The result of the Clinton plan would be an increase in the number of households that don't pay any income taxes, something many Republicans have criticized. Still, there is some bipartisan support for expanding the child tax credit, with Sen. Marco Rubio (R., Fla.) suggesting a similar idea during his presidential campaign.

The proposal comes at a time when Mr. Trump is facing fallout from a video where he speaks about women in vulgar terms. Mrs. Clinton has scored hits attacking Mr. Trump but has struggled to draw attention for her agenda. She has delivered speeches in recent weeks on her faith, her work for children and families and a proposal for national service, but her campaign is vexed by how to break through.

"When you're running against [Mr. Trump] and he generates so much controversy and therefore headlines, it's hard to break through on any one day. And that's why we just have to keep at it," Clinton communications director Jennifer Palmieri said Monday.

The Clinton campaign described the new proposal on the child tax credit as a "down payment on her overall vision for tax relief for middle-class families."

Aides said she eventually wants to expand the tax credit for families with older children, and to make more refundable tax credits available to low-income workers without children.

Mrs. Clinton has also proposed new tax credits for people with particularly high out-of-pocket, health-care costs and for families caring for parents and grandparents.

Under current law, married couples who earn less than $110,000 a year qualify for a $1,000 tax credit per child under age 17. The credit phases out as income increases. Single parents also qualify, with lower income thresholds.

Mrs. Clinton would expand that credit in two ways. She would increase the value of it for young children. And she would change the rules so the tax code would no longer exclude the first $3,000 in earnings in determining whether a family is eligible for the tax break for children of all ages.

The plan is aimed at helping families with children, but wouldn't necessarily generate economic growth, said Michael Strain, director of economic policy studies at the American Enterprise Institute, a Washington think tank that promotes free enterprise. Lowering overall tax rates would spread the benefit to taxpayers without children.

"If your goal instead is to offer financial assistance to parents of children, then this is a policy you want to turn to," Mr. Strain said. He noted that the credit delivers cash to families, letting them decide how to spend it, versus subsidizing child care, which directs the dollars to child-care providers.

Mr. Strain said his concern about Mrs. Clinton's plan is that it comes in addition to proposals to increase child-care subsidies, expand paid family leave and provide assistance for college tuition. "This seems like just trying to turn every knob and pull on every lever in the arsenal," he said.