b'HISTORY The story behind these tax credits For most of the countrys first 200 years,and increase the amount of the credit. Americans didnt pay federal taxes onIt also temporarily increased the CTCs income deemed necessary to afford theper-child credit and offered optional essentials. In fact, prior to World War II,monthly payments from July through fewer than ve percent of Americans paidDecember to make the money availableincome taxes. Even when the federalfor recurring bills, rather than having governments reliance on income taxesto wait for a tax return to process.increased during the war, CongressAnalysis of the data from the last six made sure to exempt a basic income andmonths of 2021 showed that the enhanced regularly made adjustments to protectcredits succeeded in reducing nancial those earning minimal or modest wages. instability, and that most recipients With bipartisan support, a temporaryused the money appropriately.* The earned income tax credit (EITC) passedadministration anticipated making those in 1975. Congress believed this workexpanded benets permanent with the bonus supplement to the wages of poorBuild Back Better Act in 2021, but the laborers would motivate them to worklegislation narrowly failed due to lack and result in fewer families needingof support from policymakers concerned welfare. Following several extensionsabout potential misuse of the uncondi-of the temporary credit, the EITCtional payments and whether they would became permanent in 1978, and hasdiscourage people from working.since undergone multiple increases to the amount of the credit or changes *Read some real-life experiences on pages 57. to eligibility for claiming the credit.After the 1997 addition of the ChildChanges to both the EITC Tax Credit (CTC) created to offset theand CTC over the years nancial burdens associated with raisinghave generally attracted children, policymakers have regularlybipartisan support. expanded the scope and size of bothCurrently, the main issue programs, including at least partialboils down to whether tax credits should remain tied to a refundability. The EITC and CTC taxpayers income. Some believe tax credits focused on the have turned into two of the federalneedy should help incentivize work by requiring some income governments largest antipovertyto receive the full benefit. Others think tax credits should platforms. help provide for the needy, even if they dont earn any wages. Fast forward to March 2021 whenMany experts prefer that changes have significant bipartisan Congress passed the American Rescuesupport to avoid modifications every time the party control-Plan as an attempt to help the countryling Congress changes. Bipartisan solutions require creativity, recover from the economic, health, andbut legislators continue to explore how to strengthen the tax social disruptions caused by the COVID-19credits while addressing any shortcomings and hope to reach pandemic. That legislation includedan agreement that will permanently expand the EITC and CTC a temporary expansion of the EITC towith next years taxes. include more workers without dependents 4'