Struggling families were given a lifeline this summer and unless Congress acts fast it will disappear.
The child tax credit has been in the tax code for decades and was recently expanded by the last COVID rescue bill: the American Rescue Plan Act, which became law in March.
The credit was increased from $2,000 to $3,000 per child, with an additional $600 for children younger than age 6.
The full credit covers almost 90 percent of families. It is available to families with incomes of up to $150,000 for couples and $112,000 for single parents. And it is fully refundable, meaning that the credit is not only applied to reduce the bill for taxes owed, but also is paid out in full, even to families who don’t owe any taxes.
Starting in July, families began receiving their tax credit in monthly installments, easing the burden on low-income, working and middle-class families. The payments helped pay rent, buy groceries and cover child care, enabling parents to go back to work.
The program is expensive: It cost $120 billion this year, but the proposed extension wouldn’t add to the deficit. It would be funded with a partial rollback of reductions in corporate tax rates, which were slashed in 2017, according to the Portland Press Herald.
Studies are beginning to show that the expanded program has been a success — keeping roughly 3 million children out of poverty in its very first month. According to a report recently issued by the Center on Poverty & Social Policy, “the expanded Child Tax Credit has the potential to achieve even greater child poverty reduction. If all likely-eligible children are covered, it has the potential to reduce monthly child poverty by up to 40 percent on its own; in combination with all COVID-related relief, it could contribute to a 52 percent reduction in monthly child poverty.”
For the average Americans struggling to make ends meet, a monthly, flexible-use cash advance allows them to finally afford a laptop or new clothes for school, that car repair or maybe even a dinner out.
But a few months is insufficient time to fully gauge a program of this magnitude. Congress should give it more time.
Our representatives must take a long, hard look at the growing body of data but also get out in their districts and talk to families who are benefiting from the credit. We also urge families benefiting from the credit to write to their elected officials and share their stories.
The pandemic will end, poverty will not. Nor will many other issues facing American families. Bold, long-term solutions are needed. The credit is one of them.