TAX POLICY CENTER | URBAN INSTITUTE & BROOKINGS INSTITUTION 11
maximum credit to taxpayers with income under $125,000; and make the credit refundable. We assume the credit
rate phases down by 1 percentage point for every $2,000 (or fraction thereof) by which AGI exceeds $125,000,
reaching a minimum rate of 20 percent at AGI greater than $183,000.
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Increase the child tax credit to $3,000 per child; allow an additional $600 for eligible children under age 6; allow the
credit for eligible 17-year-old children; and make the credit fully refundable. We assume the proposal is effective as
of January 1, 2021, and sunsets after December 31, 2022.
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Create a refundable tax credit of up to $15,000 for down payments available to first-time home buyers that is
payable when taxpayers purchase their home. We assume
• the credit equals 20 percent of the home’s purchase price up to a maximum of $15,000, and
• the credit phases out between $270,700 and $290,700 of AGI for married couples filing joint returns and
between $150,400 and $170,400 for all other filers (the same phase-out range as for the temporary 2010 home-
buyer’s credit but adjusted to reflect inflation to 2022).
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Create a refundable renter’s tax credit equal to the difference between 30 percent of recipients’ income and the
lower of their rent or the Small Area Fair Market Rent; the total amount of credits across all recipients is capped at
$5 billion a year. We assume the proposal is the same as proposed by Sard and Fischer (2013) which is limited to
recipients with incomes below 150 percent of the federal poverty level.
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Increase tax preferences for middle-income taxpayers’ contributions to 401(k) plans and IRAs. We assume
• the proposal replaces the deduction for worker contributions to traditional IRAs and the income exemption for
contributions to defined-contribution pensions with a refundable tax credit as proposed by Gale, John, and
Smith (2012);
• the credit rate is 26 percent, which is roughly revenue neutral over the long run before considering any “hold-
harmless” provisions; and
• the proposal holds harmless taxpayers with incomes below $400,000.
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Provide automatic enrollment in IRAs for workers who do not have a pension or 401(k)-type plan. Offer tax credits
to small businesses to offset the costs of workplace retirement plans. We assume the proposal is the same as
detailed by the US Department of the Treasury (2016, 134–38).
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Restore the full electric vehicle tax credit, target it to middle-income consumers, and prioritize the purchase of
American-made vehicles. We assume the proposal
• makes the electric vehicle tax credit permanent,
• repeals the per manufacturer cap, and
• phases out the credit for taxpayers with income above $400,000.
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Provide a tax credit of up to $5,000 for family caregivers of individuals with physical and cognitive needs. We
assume the credit is the same as in the Credit for Caring Act of 2019 (except with a $5,000 maximum).