President Joe Biden wants the U.S. to spend $1.8 trillion to benefit children and families as it recovers from the coronavirus pandemic.
The American Families Plan, to be offset in 15 years by raising taxes on the richest Americans, would focus on child care, education from preschool to college, family leave and child nutrition.
To pay for the spending, Biden would reverse parts of President Donald Trump’s 2017 tax cuts and close tax loopholes.
Here is a closer look at the details:
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SPENDING
ON EDUCATION
- $200 billion for free preschool to all 3- and 4-year-olds, through a national partnership with the states. It would save on average $13,000 per family and benefit an estimated 5 million children, according to the administration.
- $109 billion for two years of free community college for Americans. Young immigrants living in the U.S. illegally who were brought to the country as children would be eligible.
- About $85 billion to increase Pell Grants by $1,400 for low-income students. The raise would help to reduce the dependence on education loans.
- $46 billion for historically Black colleges and universities and for tribal colleges and universities, including $39 billion for two years of subsidized tuition for students from families earning less than $125,000 a year.
- $9 billion for scholarships and training for teachers.
ON MEDICAL BENEFITS
- $200 billion to make permanent temporary reductions in the Affordable Care Act’s health insurance premiums.
- $225 billion to create a national family and medical leave program. Workers would receive up to $4,000 a month.
ON OTHER SOCIAL BENEFITS
- $225 billion to subsidize child care for families and support child care workers. Families would pay only a portion of their income for child care based on a sliding scale.
- $45 billion to improve school meals and offer food to children during the summer.
- Extend an enhanced child tax credit through 2025. It could be paid out monthly. Eligible families would receive $3,600 a year per child for children under age 6 and $3,000 per child for children ages 6 to 17.
- Increase tax credits for child care permanently. The credits would cover up to half of a family's spending on care for children under age 13, or for a total of $4,000 for one child or $8,000 for two or more children.
OTHER
- Make the expanded Earned Income Tax Credit permanent for workers who do not have children.
- Allow the IRS to regulate paid tax preparers.
- Tie unemployment benefits to underlying economic conditions.
FUNDING
- Increase funding for the IRS to audit wealthier taxpayers and mandate that financial institutions report earnings from investments and business activity in ways similar to wages. The change could raise $700 billion over 10 years.
- Raise the top tax rate on the wealthiest Americans from 37% to 39.6%. The rate was 39.6% before the 2017 tax cuts.
- Taxpayers earning $1 million or more a year, the top 0.3%, would pay 39.6% on income from capital gains such as the sale of a stock or another asset. The rate is now 20%.
This article contains material from CNBC and The Associated Press
