What U.S. Lawmakers Can Learn from the U.K.’s Unrest over Tax Credit Cuts

By Kate Skochdopole

If this week’s uproar over tax credit cuts in the United Kingdom is any indication, Congress should be keen to protect the Earned Income Tax Credit (EITC) and Child Tax Credit from expiring provisions.

U.K. Prime Minister David Cameron and Members of Parliament (MPs) recently introduced a deficit reduction plan that would significantly cut the Child Tax Credit and Worker Tax Credit (WTC) – a credit much like the U.S.’s EITC. The plan would lower the maximum income to collect the credit, cut the CTC for families with more than two children and freeze benefit amounts for four years. The Institute for Fiscal Studies estimated the average family collecting tax credits would lose £942 ($1400) per year under this plan.

The public hasn’t taken kindly to the proposal. Advocates took their frustrations to Twitter, and #TaxCredits trended globally, with more than 70,000 tweets over three days. In one case, a recipient of the credits yelled at an MP on national television.

In response to the uproar, the House of Lords, the upper house of Parliament, rejected the plan and finance officials are going back to the drawing board to develop a proposal that will both reduce the deficit and help support low-income working families.

These pending tax credit cuts hit close to home here in the U.S. In 2017, key provisions to the EITC and CTC are set to expire and unless Congress takes action to extend them or make them permanent, 50 million Americans face a tax hike. As lawmakers consider tax extender legislation this fall, they should keep in mind the fallout currently underway in the U.K.

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