A parent and child wait to enter P.S. 188 The Island School in New York City on September 29. President Joe Biden's new plan raises the amount of the child tax credit available to the lowest-income families through 2025. File Photo by John Angelillo/UPI | License Photo
April 28 (UPI) -- President Joe Biden released details Wednesday of his $1.8 trillion American Families Plan -- a sweeping legislative proposal for federal investments in families, children and education, to be funded largely by tax increases on the wealthy.
Details of the plan include universal prekindergarten, two years of tuition-free community college, an expanded family and medical leave program and monthly payments of at least $250 to low-income parents.
Biden will pitch the proposal Wednesday night during his first address to a joint session of Congress. The plan is part of the administration's COVID-19-era economic recovery efforts.
Under the plan, about $225 billion would be spent on expanding access to child care, along with a $15 minimum wage for early childhood staff. The goal, the White House said, is to ensure that low- and middle-income families pay no more than 7% of their income on child care.
Biden also wants to spend $45 billion on meal programs for children and low-income families. That part of the package expands the number of schools in low-income areas that provide free and reduced price school lunches.
A senior administration official told reporters Tuesday night the proposed investments "will yield significant economic returns, boosting productivity and economic growth; producing a larger, more productive, and healthier workforce on a sustained basis."
"This evidence is overwhelming -- evidence that a dollar invested in high-quality early childhood programs results in more than $7 in benefits, including increased wages, improved health..." the official added. "It shows it keeps mothers in the workforce, increasing labor force participation, boosting economic growth."
Biden's plan also provides $800 billion in new tax cuts that benefit lower- and middle-income workers and families. The proposal would extend key tax cuts that were in the American Rescue Plan, such as tax credits to lower health insurance premiums, an estimated average of $50 per person per month.
The American Families Plan would be paid for with an increased capital gains tax rate, increased IRS auditing enforcement on high-income Americans and businesses and a higher top income tax rate.
Audit rates for Americans making less than $400,000 a year would not increase, officials said.
The proposal hikes the top individual tax rate from 37% to 39.6% for taxpayers in the top 1% of income. The capital gains tax rate for households making over $1 million would also increase to 39.6%.
It would require financial institutions to report information on account flows so that earnings from investment and business activity are subject to more reporting.
Also, the Internal Revenue Service would get increased funding to ensure that additional resources go toward enforcing tax compliance among those with the highest incomes. In other words, it gives the IRS more funding to go after wealthy Americans or corporations that don't pay their share of taxes.
The administration unveiled a $2.3 trillion infrastructure plan, the American Jobs Plan, last month. That measure and spending proposals in the American Families Plan would be made over a 10-year period, White House officials said.
Some details of the plan include:
- Spending $225 billion on a family and medical leave program. Workers would get up to $4,000 a month if they require leave to care for a new child, a family member who is seriously ill, or deal with an illness.
- Universal prekindergarten for all 3- and 4-year-old children, spending about $200 billion on the program.
- Two years of tuition-free community college to anyone who wishes to attend -- costing about $109 billion.
- More affordable college for low-income students and students at historically black colleges and universities, tribal colleges and universities, and other minority-serving institutions; and provides grants to these institutions to create or expand educational programs in high-demand fields.
- Gives up to $1,400 in additional assistance to low-income students by expanding the maximum of a Pell Grant -- a 20% expansion and costing about $85 billion.
- More than $4 billion in funding for certification and support programs for teachers. Teachers could earn credentials in high-demand areas such as special education, bilingual education and certifications that improve teacher performance.
- Raises the amount of the child tax credit available to the lowest-income families through 2025. Eligible families would receive at least $250 monthly per child through an extension of the enhanced tax credit that was part of the American Rescue Plan.