If enacted, HB 463 will have widespread implications on state laws regarding taxation, particularly the treatment of non-refundable state tax credits as refundable. Taxpayers who currently only receive non-refundable credits would benefit from refunds even if their tax liability does not fully absorb the credit. The bill also introduces increased rates for corporate taxes, indicating a shift in revenue strategies aimed at balancing the fiscal needs against the interests of individual taxpayers. Moreover, the bill aims to use the net revenue generated from these changes to reduce the national deficit and debt.
Summary
House Bill 463, titled the 'Lower Your Taxes Act', aims to amend the Internal Revenue Code of 1986 by expanding the earned income and child tax credits. The bill proposes a significant increase in the earned income tax credit percentage, with adjustments to phaseout percentages and income thresholds. It establishes a monthly child tax credit that provides taxpayers with a specified allowance for each child under six years of age. The changes are designed to enhance the financial support provided to low- and moderate-income families, thereby reducing poverty and incentivizing work.
Contention
The bill has generated considerable debate. Proponents argue that expanding these credits is necessary for supporting working families and stimulating economic growth, especially in light of rising living costs. Critics, however, express concern regarding the potential increase in corporate tax rates, which they believe could lead to reduced investments and job creation. Furthermore, there are concerns about the sustainability of the expanded tax credits and how they will be financed in the long term, as well as the overall impact on federal tax revenue.
Children Have Opportunities in Classrooms Everywhere Act This bill allows tax-exempt distributions from qualified tuition programs (known as 529 plans) to be used for additional educational expenses in connection with elementary or secondary school. The bill also allows certain federal funds for elementary and secondary education to follow a student from a low-income household to the public school that the student attends or for tax-exempt educational expenses. Under current law, tax-exempt distributions in connection with elementary or secondary school are limited to tuition for a public, private, or religious school. The bill allows these distributions to be used additionally for curriculum and curricular materials, books or other instructional materials, online educational materials, tutoring or educational classes outside the home, testing fees, fees for dual enrollment in an institution of higher education, and educational therapies for students with disabilities. Distributions may also be used for tuition and the purposes above in connection with a home school (whether treated as a home school or a private school under state law). In addition, the bill directs state educational agencies to allocate grant funds to ensure the funding follows students to their public school or for other tax-exempt educational expenses outlined by the bill. Each state that carries out these allocations must establish a plan that allows the parent of an eligible child to apply for grant funds.