(NEXSTAR) – President Joe Biden’s $1.9 trillion American Rescue Plan would benefit millions of Americans, but it would have an outsized impact for the people who make up the poorest fifth of the population, according to an analysis by the Institute on Taxation and Economic Policy (ITEP).
The nonpartisan, nonprofit think tank that studies tax policy analyzed the proposal laid out by the House Ways and Means Committee last week and found that, between the stimulus checks and tax credit expansions, the average family income for the poorest 20% of America would jump by 33%, or $3,590, pre-tax.
The large relative bump in income comes from a combination of the $1,400 stimulus checks and the expansion of the Chid Tax Credit (CTC) and the Earned Income Tax Credit (EITC).
While the combined cash and tax benefit would be similar for 95% of Americans, for the poorest 20% – who make an average of $10,900 a year – Biden’s stimulus plan would, proportionally, be a massive boost.
The plan from Democrats in the House Ways and Means Committee would give $1,400 stimulus checks to individuals making up to $75,000, phasing out up to $100,000. For joint filers that range is $150,000 to $200,000 with additional $1,400 stimulus checks for dependents.
A study by Harvard-based, nonpartisan Opportunity Insights found that consumers making less than $78,000 were more likely to spend their stimulus payments within the first month than higher earners.
The CTC would jump from a maximum of $2,000 to $3,000 for children 6 and older, and $3,600 for children under 6. Under the plan, the credit will also be full refundable and will do away with the earnings requirement that researchers say keeps the poorest Americans from receiving the benefit.
The EITC would also roughly triple for low-income working people under the Democrats’ plan from $500 to $1,500, the analysis found, by lowering the age eligibility and raising the income cap.
