Bill Overview
Title: Family and Community Inflation Relief Act of 2022
Description: This bill provides for an inflation adjustment to the amount of (1) the child tax credit, (2) the tax credit for expenses for household and dependent care services, (3) the American Opportunity and Lifetime Learning tax credits, and (4) the tax deduction for interest on education loans. The bill grants the Internal Revenue Service authority to adjust the standard mileage rate for the use of an automobile for charitable purposes (such rate may not be less than the rate used for purposes of the medical expense deduction). It also extends for one year the suspension of the tax deduction for state and local taxes.
Sponsors: Sen. Grassley, Chuck [R-IA]
Target Audience
Population: Individuals and families affected by tax credit and deduction adjustments
Estimated Size: 150000000
- The bill adjusts the child tax credit, directly impacting families with children.
- Similarly, adjustments to the tax credit for household and dependent care services will affect families incurring such expenses.
- The American Opportunity and Lifetime Learning tax credits are primarily directed towards individuals pursuing higher education, so students and their families are impacted.
- Adjustments to the tax deduction for interest on education loans will most impact recent graduates and current students with loans.
- The changes in mileage rates for charitable purposes will impact individuals who use personal vehicles for volunteering.
- The suspension of the state and local tax deduction primarily affects taxpayers in states with higher state or local taxes.
Reasoning
- This policy primarily affects families with children, students and their families, recent graduates with loans, and individuals in states with high taxes.
- The budget constraints imply that not every eligible individual will receive the maximum benefit, meaning some impact levels will be low or none.
- Impact will also vary based on individual financial situations, geographical location, and family structure.
- Given the policy's budget constraints, it's likely that benefits will prioritize families with children and individuals in education or with education loans.
- Be aware that while the policy aims to improve financial wellbeing, not every person in the target population will experience a dramatic change in self-reported wellbeing.
Simulated Interviews
Elementary School Teacher (Los Angeles, CA)
Age: 34 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- I appreciate any additional help through tax credits, as raising kids in a city like Los Angeles is expensive.
- Adjusting the child tax credit is favorable, but I'm concerned about how broadly these will reach given budget limits.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
University Student (Austin, TX)
Age: 22 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- It's challenging to balance school, work, and loan payments, so any tax relief is a bonus.
- I'm skeptical about how much these changes will really benefit students like me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Software Engineer (Des Moines, IA)
Age: 40 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- The policy changes on tax credits will help, but only if they're substantial and sustained.
- I'm concerned about state and local tax deduction impacts and overall effectiveness if not managed properly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 5 |
Retired (Miami, FL)
Age: 65 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- The policy doesn't directly affect me, more relevant for families with children and student loans.
- Any adjustment needs to be managed carefully within budget constraints to ensure fairness.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Nurse (New York, NY)
Age: 29 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 7.0 years
Commonness: 15/20
Statement of Opinion:
- Struggling with student loans and high living costs, tax credits and deductions should help noticeably.
- I'm cautiously optimistic about the promised adjustments, while being aware of budget limitations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Freelance Graphic Designer (San Francisco, CA)
Age: 31 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 3.0 years
Commonness: 8/20
Statement of Opinion:
- Any relief from student loan interest deductions would be beneficial.
- The suspension of state and local tax deduction makes living here costly, not optimistic for significant change with limited funds.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 4 | 4 |
| Year 20 | 3 | 3 |
Marketing Executive (Atlanta, GA)
Age: 45 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- The college-related tax credits are useful, but limited scope without broader tax reform.
- I'm a bit skeptical about how much relief the changes can realistically provide.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Small Business Owner (Seattle, WA)
Age: 52 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 5/20
Statement of Opinion:
- The charity mileage adjustment will help with my volunteering efforts, although minimal impact overall.
- I'm not within the core target but appreciate any aid.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Public Relations Specialist (Chicago, IL)
Age: 36 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 8.0 years
Commonness: 11/20
Statement of Opinion:
- Child tax credits are crucial to support daily expenses.
- With shared custody, benefits need precise targeting to be effective within budget constraints.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
High School Teacher (Detroit, MI)
Age: 27 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- Student loan and education tax relief would help, though not expecting drastic changes.
- A focus on maximizing impact within the budget is crucial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Cost Estimates
Year 1: $1500000000 (Low: $1000000000, High: $2000000000)
Year 2: $1500000000 (Low: $1000000000, High: $2000000000)
Year 3: $500000000 (Low: $250000000, High: $750000000)
Year 5: $100000000 (Low: $50000000, High: $150000000)
Year 10: $50000000 (Low: $25000000, High: $100000000)
Year 100: $1000000 (Low: $500000, High: $1500000)
Key Considerations
- Adjusting tax credits for inflation protects families' purchasing power but leads to decreased federal revenue.
- Extended suspension of state and local tax deductions could face political resistance and only provides short-term financial relief.
- Estimates depend heavily on the inflation rate and taxpayer behavior in response to changes in deductions and credits.