American Family Act would pay $300 a month for kids under 6

To help put more money in the pockets of low and middle income families, U.S. Sen. Bob Menendez, D-N.J., wants to increase tax credits for lower income families earning less than $150,000 a year.

"The American Family Act is the kind of bold action we need to give more low-income children, and especially children of color a fighting chance of making it into the middle class," Menendez said.

Today about 10 million U.S. children live in poverty. At 15 percent, New Jersey has one of the highest poverty rates in the industrialized world. It used to be much higher but nutritional assistance, housing subsidies, tax credits and other programs have helped reduce child poverty from 28 percent in 1967 to 15 percent today.

"At at time of rampant income inequality, we simply are not doing enough to help families keep up with the soaring health care, education, housing and child care costs," Menendez said.

In high-cost states like New Jersey, he said research shows that families with two children need to earn $48,000 a year to just get by. By that metric, nearly a third of New Jersey's children, well over 600,000, live in low-income families. More than two thirds of them are children of color.

Menendez said while the birth of a child is joyous, it is also expensive and a leading cause why families fall into poverty.

"That's why we create a new young child tax credit for children under 6 where $3,600 per year per child — that's $300 a month — [helps] pay for strollers, car seats, diapers, day care and more," said Menendez. The credit is currently capped at $2,000 a year.

For families with children ages 6 to 16, the legislation would increase the current child tax credit from $2,000 to $3,000 per year. That would be $250 more per month per child.

The legislation would make the child tax credit fully refundable. Under current law, about 27 million of America's poorest children don't receive the full credit because their parents don't make enough money.

Since raising a child imposes daily expenses that can't wait for annual tax refunds, the legislation would direct the U.S. Treasury to distribute these credits in monthly payments.

Menendez said families might choose to use the credits to help pay for tutoring, buy a new computer and pay for daycare expenses.

The credit would be claimed by nearly 9 out of 10 households with children in New Jersey.

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