Central to President Joe Biden's plan to hike federal spending by $3.5 trillion is a promise that middle-class Americans won't face a tax increase.
The culprit for that future tax increase is the expanded child tax credit, which the House tax plan would extend through 2025.
The House Democrats' plan would shift the tax burden toward wealthier Americans next year, largely because of how Biden's proposal relies on hiking income tax rates for high earners and raising the capital gains tax rate, which is applied to investment earnings.
Why 2025? Because the tax credit-which isn't really a tax credit at all, but rather a direct subsidy since it is paid out even if recipients have no income and owe no federal taxes-is expensive.
The Committee for a Responsible Federal Budget estimates that the child tax credit will cost about $110 billion annually, and extending the tax credit through 2025 will cost $450 billion.
By setting the expanded tax credit to expire four years from now, Democrats are able to ignore roughly $700 billion in future costs that have to be offset in order to use the reconciliation process.
Democrats will be able to wave away objections about those future tax increases because of course Congress will extend the child tax credit beyond 2025eventually.
https://reason.com/2021/09/16/the-700-billion-gimmick-at-the-center-of-bidens-tax-plan/
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