The Child Tax Credit: Boosting the Lives and Well-Being of Our Children
This blog was updated on June 15 to reflect the introduction of a Senate bill on the Child Tax Credit and an amendment offered in the House on the Child Tax Credit.
Child poverty in our nation negatively impacts every aspect of the lives of children — their health, education, hunger, homelessness, and incidents of child abuse and neglect.
We have long understood that child poverty has life-long and intergenerational consequences. Sadly, this is particularly the case in the United States.
Our country’s inaction and failure to address child poverty is both harmful and tragic. Making matters worse, it is a policy choice by our nation’s policymakers.
The biggest problem is that one-third of our nation’s children fail to qualify for the full Child Tax Credit because their parents make too little.
Let me repeat…our tax code punishes children because their parents make too little.
Unless harming children is your goal, this policy makes no sense. If the Child Tax Credit were to no longer discriminate against low-income children, there would be 3–4 million fewer children in this country living in poverty. Child poverty could be cut in half.
Fortunately, last week, Reps. Rosa DeLauro (D-CT), Suzan DelBene (D-WA), Ritchie Torres (D-NY), and 205 additional cosponsors introduced the American Family Act (H.R. 3899).
On June 14, during Children’s Week, Sens. Sherrod Brown (D-OH), Michael Bennet (D-CO), Cory Booker (D-NJ), Raphael Warnock (D-GA), Ron Wyden (D-OR) and 37 additional cosponsors introduced the Working Families Tax Relief Act (S. 1992).
These two bills would make permanent the Child Tax Credit language similar to that was passed as part of the American Rescue Plan Act (ARPA) in 2021 that temporarily improved the lives of more than 60 million children, lifted 3–4 million children out of poverty, and significantly cut child hunger in this country.
We urge anybody reading this who cares about the lives and well-being of children to call your Member of Congress and urge passage of H.R. 3899 and S. 1992.
Unfortunately, the House of Representatives is considering a package of tax cuts that are focused on benefitting the wealthy and corporations. The package might include a temporary increase in the standard deduction for heads of household, but again, that policy would predominately help wealthier families and exclude low-income families with children. Expanding the Child Tax Credit would be much better policy for children and families.
In the House Ways and Means Committee, Rep. DelBene (D-WA) offered an amendment to restore the Child Tax Credit.
Although the amendment was blocked in Committee for now, child and family advocates and our allies in Congress will not be deterred. As Axios has reported, Senate Finance Committee Chairman Wyden and the White House have made it clear there will be no tax deal on extending business tax credits, including the R&D credit, without action on the Child Tax Credit.
Kids must not be left behind, yet again. However, it could happen unless Congress hears from parents, grandparents, caregivers, and all child advocates...NOW!
Fixing Policy That Harms Children
Rep. DeLauro’s and Sen. Brown’s bills correct the unfathomable federal policy in which our nation’s tax policy purposely withholds support for our nation’s poorest children and punishes them because their parents make too little. For the children who need the Child Tax Credit the most, they qualify for the least.
In some circumstances, this is because a parent is home taking care of a child or children. In such cases, families receive a double penalty: losing both wages and the Child Tax Credit for making the decision to care for their child.
Who is being harmed by this exclusionary and discriminatory policy?
According to a May 2021 study by the Center on Poverty and Social Policy at Columbia University, those “left behind” were disproportionately: (1) children under the age of 6 (40% receive only partial or no credit); (2) Black and Hispanic children; (3) children in single parent households (“70% of children in families headed by single parents who are female do not receive the full credit”); and, (4) children in rural communities.
It is so utterly disturbing that we tolerate harm to children in ways that we never would the elderly. As NPR’s Greg Rosalsky reports:
Our welfare system has long spent generously on the old, but it has consistently skimped on the young. While America spends about as much, or even more on the elderly than many other rich nations, it spends significantly less on kids. Among the almost 40 countries in the OECD, only Turkey spends less per child as a percentage of their GDP. It’s a big reason why the United States has a much higher rate of child poverty than most other affluent countries — and even has a higher rate of child poverty than some not-so-affluent countries.
Rather than addresses this shortcoming, Congress recently passed a debt ceiling bill accompanied by a number of side agreements that exempt certain programs, such as Medicare, Social Security, infrastructure, and even ethanol subsidies from budget cuts.
Who is being left unprotected on the chopping block? CHILDREN.
Sadly, in the name of “future generations,” Congress is slashing investments in children.
The consequences of these tragic policy decisions are enormous and costly to both our nation’s children and our society. The National Academy of Sciences, Engineering, and Medicine (NASEM) estimates that child poverty already costs our society up to $1.1 trillion annually.
By a 86–12% margin, a May 2022 poll by Lake Research Partners finds that American voters are concerned (61% very concerned) by the negative consequences of child poverty.
Rather than addressing the important concerns and needs of children and families, far too many policymakers are focused on agendas that pay lip-service to children while the actual legislation ignores or will have the effect of inflicting harm on children and their development.
The National Commission on Children Recommended a Fully Refundable Child Tax Credit in 1991
Leaving America’s poorest children is not how the Child Tax Credit was supposed to work. In fact, over 30 years ago, a bipartisan National Commission on Children that was created under President Ronald Reagan and presented to President George H.W. Bush recommended the creation of the Child Tax Credit for all children and families. As the 1991 bipartisan commission explained:
The United States is the only Western industrialized nation that does not have a child allowance policy or some other universal, public benefit for families raising children…. Other nations that have adopted child allowance policies regard such subsidies as an investment in their children’s health and development and in their nation’s future strength and productivity.
The National Commission on Children’s report, Beyond Rhetoric: A New American Agenda for Children and Families, recommended that the Child Tax Credit go to all families with children and not be withheld in whole or in part from its poorest children and families.
As the 1991 Commission proposed:
Because it would assist all families with children, the refundable child tax credit would not be a relief payment, nor would it categorize children according to their “welfare” or “nonwelfare” status. In addition, because it would not be lost when parents enter the work force, as welfare benefits are, the refundable child tax credit could provide a bridge for families striving to enter the economic mainstream. It would substantially benefit hard-pressed single and married parents raising children. It could also help middle-income, employed parents struggling to afford high-quality child care. Moreover, because it is neutral toward family structure and mothers’ employment, it would not discourage the formation of two-parent families or of single-earner families in which one parent chooses to stay at home and care for the children.
The Commission’s recommendations were bipartisan, as were its arguments recognizing parenting is hard work and that the Child Tax Credit had positive work incentives but should not punish parents who choose to “stay at home and care for the children.”
In urging Republicans to reclaim their long-standing past support for the Child Tax Credit, Josh McCabe explains that Republican congressional leadership proposed a bill in 1995 that would have made the Child Tax Credit refundable by “providing families relief from both income and payroll taxes.” He notes this would have ‘granted more relief to working-class families who tend to pay more in payroll taxes than income taxes,” but unfortunately, “the credit was ultimately made nonrefundable to make more room for other tax cuts.”
The final bill, the Taxpayer Relief Act of 1997 (P.L. 105–34) was signed into law by President Bill Clinton and created a $500 nonrefundable credit for children under the age of 17. This was an important step for millions of middle-class and upper-middle families with children. But by making it nonrefundable, the provision excluded and left behind millions of the poorest children and families in our society.
A subsequent expansion of the CTC signed into law by President George W. Bush made a portion of the credit refundable for the first time in 2001. However, even though future expansions of the CTC were signed by President Barack Obama in 2009 and 2015 and by President Donald Trump in 2017, 23 million children were still left behind in this country with no or only partial payments because their parents make too little to qualify for the full credit.
First Focus Campaign for Children worked with California Reps. Lucile Roybal-Allard (D-CA) and Barbara Lee (D-CA) with support from Tom Cole (R-OK) to provide funding to the NASEM to study ways to cut child poverty in half. After a thorough examination of the evidence from other countries and economic analysis of the impact of a variety of possible policy solutions, the esteemed panel of experts issued a final report in 2019 that was entitled A Roadmap to Reducing Child Poverty.
NASEM recommended to Congress that the most important policy change to child poverty in America would be to make the Child Tax Credit fully refundable.
Progress At Last: The Child Tax Credit Was Made Fully Refundable in 2021
Fortunately, 30 years after the National Commission on Children’s recommendation to create a Child Tax Credit that was fully refundable, President Joe Biden successfully signed into law the American Rescue Plan Act (ARPA) to achieve that goal.
ARPA was signed into law on March 11, 2021, and provided monthly payments to the families of 60 million children in the amount of $300 a month for each child under the age of 6 and $250 a month for all other children in 2021.
The legislation reduced child poverty by nearly 3 million children across this country.
This is equivalent to filling the stadium of the 2023 NBA Champion Denver Nuggets’ Ball Arena to capacity 152 times.
In other words, the children lifted out of poverty by ARPA could fill Ball Arena for every NBA regular season home game of the Denver Nuggets for nearly four full NBA seasons.
Across our great nation, people expressed enormous gratitude for the positive impact the fully refundable Child Tax Credit meant to their families and their children.
And for the kids, it was life-changing. There is evidence that it resulted in drops in child hunger, homelessness, and child abuse and benefits the education and health of children.
Despite Strong Public Support, the Senate Let the Improved Child Tax Credit Expire
The American people strongly supported an extension of the full refundable Child Tax Credit. In a May 2022 poll by Lake Research Partners, those surveyed favored its extension by a wide 72–21% margin.
On August 12, 2022, the House of Representatives responded by passing the Build Back Better Act (BBBA) to extend the improved Child Tax Credit. And yet, the Senate failed to extend the improved Child Tax Credit.
Unfortunately, Sen. Joe Manchin (WV) objected to the inclusion of many of the children’s provisions in that package and demanded they be stripped in the Senate and the final enacted Inflation Reduction Act (IRA) of 2022.
Sadly, due to his objection, the number of meaningful references to “children” between the two bills dropped from 436 in the House bill to just 1 in the final bill.
This was devastating to millions of children and families across this country.
For families, it resulted in a tax increase of anywhere between $1,000 to $3,600 per child. The consequence was that 3–4 million children were pushed back into poverty, as the federal government’s policy reverted to the prior policy of punishing poor children because their parents made too little money to receive the full Child Tax Credit.
This has been a significant disappointment to millions of families across the country, but more importantly, pushing millions of children back into poverty is undoubtedly having tragic consequences.
Congress has an opportunity to do right by children right NOW.
The House Ways and Means Committee is considering a series of tax bills in coming days. They have a clear choice: to either pass bills that will largely benefit the nation’s wealthiest citizens and leave millions of children behind once again OR to finally listen to the bipartisan recommendations of the National Commission on Children in 1991 and the National Academy of Sciences in 2019 and make the Child Tax Credit fully refundable.
At that point, the debate moves to the Senate and champions for the Child Tax Credit will be primed to insist on its inclusion in any final bill. For nearly two full generations, countless millions of children have had poorer outcomes due to Congress’s failure to act. Again, NOW is the time to weigh in with your senators and Member of Congress to ensure kids are no longer an afterthought.
It is well past time to do right by our children and pass a Child Tax Credit that benefits all of our children.
*****
If you would like to help ensure that children and their needs, concerns, and best interests are no longer ignored by policymakers, call your Member of Congress and urge them to expand the Child Tax Credit. You could also join First Focus on Children as an “Ambassador for Children” or becoming a paid subscriber to help us continue our work on behalf of children.