Debate: Is Increasing the Standard Deduction the Best Way to Fight Inflation?

Bloink: The greatest savings from increasing the standard deduction would go to the highest-income taxpayers. Those are precisely the taxpayers who are less likely to be impacted by inflation in the first place. That's because of the progressive nature of the U.S. federal income tax structure. Expansion of the child tax credit would provide a greater benefit for working-class families who are struggling the most in today's environment.

Byrnes: The increase in the standard deduction would have the strongest impact when it comes to reducing inflation for every American household. Further, these proposals would phase out the increased standard deduction based on income — so that highest-income families would not be favored over the lower- and middle-income families that the proposal is designed to help.

Bloink: Studies show that lower-income families often don't earn enough income to owe any federal taxes at all, meaning that they would see absolutely no benefit if the standard deduction was increased. The child tax credit, on the other hand, is a refundable tax credit, so that families would receive the same benefit regardless of whether they earn enough to owe any federal income taxes that would merely be reduced by the standard deduction.

Byrnes: Increasing and expanding the child tax credit would do absolutely nothing for hardworking Americans without children. The bottom line is that all American families have seen costs increase. We should elect the solution that provides an across-the-board benefit to fight inflation in the most effective and swift manner.

Bloink: Right now, we should focus our attention on those Americans who are most affected by inflation. We also need to work toward proposals that could garner widespread bipartisan support. Phasing in the child tax credit faster and removing the maximum limit on the amount of the credit that is refundable would accomplish both of those goals. We've already seen the impact of the expanded child tax credit during the COVID-19 pandemic — and we know that this expansion went a long way toward reducing childhood poverty.

The standard deduction increase would deliver a disproportionate level of assistance to the wealthiest Americans, who are the least likely to struggle under the effects of inflation. If we had to choose one path alone, the child tax credit expansion makes the most sense.

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