The bipartisan tax and budget agreement signed into law last week achieves many of the President’s key priorities – from increasing investments in areas like research, early education and job training to extending key incentives to support renewable energy, all while providing certainty by removing the risk of a government shutdown. But one aspect of the deal that you may not have heard about represents a major piece of the Obama Administration’s agenda for increasing opportunity and reducing poverty: the permanent extension of expanded tax credits for millions of working families.
The so-called “ARRA credits” may not be a household name, but they provide a big boost to working households across the country at tax time. First enacted as part of the Recovery Act the President signed in 2009, these credits – specifically, expansions of the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), and the American Opportunity Tax Credit (AOTC) – collectively provide about 24 million working and middle-class families a year with a tax cut of about $1,000. The ARRA credits were scheduled to expire at the end of 2017, but this agreement ensures that they will remain a permanent feature of the tax code -- even as major tax cuts for businesses were put on a path to expiration.
By making the ARRA credits permanent now, we have eliminated the risk that these vital provisions would be allowed to expire and ensured that they will continue to reward work, reduce poverty, and boost opportunity for years to come.
Jacob Leibenluft is the Deputy Director of the National Economic Council.