By: Yanneli Llamas
Nearly two years after the onset of the Covid-19 pandemic and all the drastic lifestyle changes that came with it, many families are still struggling to regain their balance. The recent end of the Covid child tax credit threatens to take away what little stability they had gained.
Beginning in July of 2021, as part of the American Rescue Plan, Congress authorized an expansion of the existing child tax credit, which essentially afforded families up to $300 per month for each child. Though many progressives had hoped to cement the tax credit permanently into law, Congress failed to renew it for another year. This oversight could prove to be devastating for many families who have come to rely on these monthly allowances.
As of November 2021, the increased child tax credit reduced child poverty by almost 30%, which means 3.8 million children were kept out of poverty thanks to this tax credit alone. This is especially important considering that most low-income families were not previously able to take advantage of the $2,000 long-standing child tax credit, because they earned too little to claim it on their yearly taxes. The regular tax credit gives a $2,000 tax credit to households earning up to $400,000 a year, but does little (if anything) to aid families most in need of it. According to Robert Greinstein, a visiting fellow at the Brookings Institution, the longstanding child tax credit excludes, in whole or in part, “basically the 27 million lowest income children in the United States.”
By contrast, the new, monthly dispersed tax credit was made available to everyone, which ensured that 3.8 million children – whose families likely would not have been able to claim the credit – were kept out of poverty. Because minority children and those living in single-parent households are disproportionately impoverished, the tax credit’s expanded reach made it possible for “half of all Black and Hispanic children, and 70 percent of children being raised by single mothers” to receive the full tax credit, which they would not have received otherwise. Continuing the expanded child tax credit is an important step towards equity.
Children living in poverty generally lack resources available to their wealthier peers that contribute to a child’s success, such as school funding, access to internet services, and access to extracurricular activities. They also generally lack basic life necessities. Keeping children out of poverty is essential for the healthy development of our nation; reducing child poverty is associated with better outcomes in children’s physical health and educational attainment, as well as lower rates of crime and adult poverty.
While opponents of the increased tax credit have expressed concerns about how families might use the funds, these fears have proven to be largely unfounded. Many surveys show that “most recipients used the money to buy food, clothing or other necessities,” as well as paying debt and putting savings towards an emergency fund. Regardless, these concerns have an easy fix: should Congress decide to reinstate the expanded child tax credit, they can simply put the same restrictions on the money as they have on other benefits, such as prohibiting the use of funds on alcohol, so as to put opponents’ minds at ease.
Critics of the expanded tax credit have also expressed concerns that it would disincentivize work, yet this concern has been debunked as well. In fact, “some researchers say it could actually lead more people to work by making it easier for parents of young children to afford child care.” In a time where many Republican lawmakers have stated the importance of getting people back to work, the reinstatement of the expanded child tax credit should be seeing bipartisan support. Considering the increased number of Covid cases contributing to job instability, the considerable benefits towards our children’s health, and the importance of attaining greater equity through early interventions, it is important that Congress renew the expanded child tax credit.
Yanneli (she/her) graduated from the University of Nevada, Las Vegas with majors in Criminal Justice and English and a minor in Brookings Public Policy. She is currently a 2L at Arizona State University’s Sandra Day O’Connor College of Law, and her legal interests include immigration and criminal justice reform. Her personal interests include cooking and getting everyone on the dance floor.