Before year-end, Congress needs to provide a “look-back” provision -- just like they did for private equity-owned companies – to protect struggling families from losing EITC and Child Tax Credits amounts when they file their taxes next year:

Thread/ http://bit.ly/3lMmq5I 

The problem: many people who do important jobs for little pay are at risk of losing some of their EITC and Child Tax Credit because the pandemic fallout has lowered their wages which are used to calculate these tax credits.

For example, a single mother with two children whose earnings fall from $15,000 in 2019 to $5,000 in 2020 would see her EITC fall from $5,920 to $2,010 and her Child Tax Credit fall from $1,875 to $375. That’s a loss of $5,410 in tax credits on top of her $10,000 loss in wages

There's a simple solution: Provide a “lookback” that would give people the option to use their 2019 earnings to calculate their EITC and Child Tax Credit instead of their lower 2020 earnings, at a relatively modest cost of $4.5 billion.

The President & Congress, along with the IRS, have enacted and implemented an EITC-Child Tax Credit lookback many times, most recently last December 19th a lookback was enacted to help people affected by Hurricane Dorian, floods in the Midwest, and other natural disasters.

There is bipartisan, bicameral support to provide a lookback this year as evidenced by the “COVID-19 Earned Income Act,” sponsored in the Senate by Democrat Sherrod Brown and Republican Bill Cassidy and in the House by Democrat Brian Higgins and Republican Mike Kelly.

Policymakers provided a lookback for highly indebted companies – many owned by leverage buyout firms in today’s economy - in the CARES Act which these companies use either their pre-pandemic 2019 income or 2020 income, whichever is greater, to maximize their interest deductions

As one law firm summed up the lookback & increased interest limitation: “The increased availability of interest deductions is expected to provide significant relief to highly leveraged businesses and private equity funds by reducing cash taxes payable.” http://bit.ly/37yJeRr 

2020 has been a brutal one, especially for people who do important jobs for low pay & who have been hit by the pandemic. The Congress provided a lookback for companies owned by leveraged buyout firms. They shouldn’t leave town without doing the same for struggling families

End