From Free Education To Tax Cuts: An Insight Into Biden’s New Family Plan

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From Free Education To Tax Cuts: An Insight Into Biden’s New Family Plan

 From Free Education To Tax Cuts: An Insight Into Biden’s New Family Plan
Image source: Pixabay

Summary

  • The American Family Plans consist of US$1 trillion in investments and US$800 billion in tax cuts.
  • Biden’s plan will provide more money to the middle class families for better education and child care.
  • The administration proposes to fund the program through tax hikes for wealthy Americans.

President Joe Biden on April 28 unveiled his American Family Plan that would support better access to education and child care for middle class families in the U.S.

The proposed American Family Plan includes US$1.8 trillion in investments and tax credits. The plan consists of US$1 trillion in investments and US$800 billion in tax cuts for families and workers in the U.S.

This is the second package following the US$1.9 trillion stimulus package, which Biden signed last month. Approximately 161 million stimulus payments of up to $1,400 per person have been made to eligible beneficiaries under the American Rescue Plan.

Biden plans to fund the US$1.8 trillion American Family Plan by increasing the tax rate for wealthy Americans.

Let’s look at the main highlights of the American Family Plan here:

Free Education for At least 4 Years

The American Families Plan proposes to invest to provide at least four years of free public education.

Biden plans to invest US$200 billion for free universal pre-school for all three and four year olds. The idea could benefit five million children and save US$13,000 for average family.

The administration will invest another US$109 billion investment for two years of free community college and US$80 billion to boost the Pell Grants, the federal financial aid for undergraduate students.

The investment will raise the maximum Pell Grant award by approximately US$1,400. Currently, seven million students depend on this grant.

Biden’s also plans to give a boost to postsecondary education with a US$62 billion investment in completion and retention activities at colleges and universities.

Family and Medical Leave Program

Biden proposes to invest US$225 billion over a decade in national leave program to provide paid leave for those who need to take care of their child or loved ones.

The program guarantees 12 weeks of paid parental, family and personal illness or safe leave by year 10 of the program. In addition, the program will pay up to US$4,000 a month, replacing a minimum of two-thirds of wages.

President also sought the Congress to pass the Healthy Families Act that will ensure seven days of paid sick leave per year for getting a flu shot, recovering from short-term illness, or for caring a sick child or family member.

Tax Relief

The American Family Plans proposes to keep the expanded the Child Tax Credit through 2025. The tax credit was increased to US$3,000 from US$2,000 for six years old and above, and US$3,600 for children below six this year under the rescue plan.

The proposal also seeks to make the temporary Child and Dependent Care Tax Credit permanent. This would give families a tax credit for up to half of their spending on qualified child care for children under age 13, up to a total of US$4,000 for one child or US$8,000 for two or more children.

Families earning less than US$125,000 will get 50 percent reimbursement, while families making between US$125,000 and US$400,000 will receive a partial credit.

Source: Pixabay

Funding Plans

Biden plans to fund the American Family Plan by increasing the top tax rate on the wealthiest Americans to 39.6 percent from 37 percent. This tax increase would reverse the Republican’s tax cut in 2017.

Households earning more than US$1 million will pay the 39.6 percent rate on their capital gains. This proposal would impact only 0.3 percent of all households.

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