The Child Tax Credit: Who’s for Kids, and Who’s Just Kidding

Our children can't wait

As the U.S. Senate prepares to vote on H.R. 7024, the Tax Relief for American Families and Workers Act of 2024, tomorrow, it is imperative that senators fully understand and face the reality that the Child Tax Credit (CTC) is a vital policy that has far-reaching implications for the well-being of children and the future of our nation. This policy matters to families and it matters NOW.

The House of Representatives passed H.R. 7024 by an overwhelming bipartisan vote of 357-70 back in January 2024. It is past time for this vote. Politicians often prefer to do their work behind closed doors with wealthy donors, corporations, and lobbyists, which is one of the reasons that children are often an afterthought. As journalist Lizzy Francis reported back in early 2020, despite the fact that children represent nearly one-quarter of the population, there was not a single vote in the U.S. Senate in 2019 focused on children. This inaction is detrimental to children. As Francis writes:

Through sheer inaction, children in America are getting screwed.

Invisibility, inaction, disregard, dismissal, gridlock, deadlock, and lack of transparency in politics are all enemies of children. We welcome this moment of attention to the issues of importance to children. Even if H.R. 7024 succumbs to a filibuster, we will at least know “who’s for kids and who’s just kidding.”

If we truly care about all of our children and want to help young adults form families, we must recognize that the current law leaves 18-19 million children behind because their parents make “too little” to qualify for the full Child Tax Credit. Current law leaves these children, who are disproportionately our nation’s youngest, living in rural communities, children of color, and children in single-parent households, completely or almost completely unsupported.

This lack of support negatively impacts the lives of children now and in the long-term. Consequently, it also has negative consequences for the nation. A Child Tax Credit that is made fully refundable, such as that included in the American Rescue Plan Act (ARPA) of 2021, would no longer leave 18-19 million behind, would lift at least 3 million children out of poverty, and make a positive impact on every aspect of the lives and well-being of children.

This improvement for children would benefit society because, as the National Academy of Sciences, Engineering, and Medicine estimates child poverty is costing this nation up to $1.1 trillion annually.

For these reasons, Senate Finance Committee Chairman Ron Wyden has expressed urgency for action:

I’m here to say, this cannot wait. 

This bill would help 16 million kids from low-income families. They should not have to wait.

While H.R. 7024 does not fully restore the ARPA Child Tax Credit, it represents a critical step in the right direction. Any improvement that helps children is worth doing NOW. In fact, according to a February 2024 National Parents Union poll, the #1 issue that parents want the federal government to act on would be to “expand the Child Tax Credit” (87-9%).

Addressing the "Baby and Child Penalties"

Current Child Tax Credit policies inadvertently penalize families, especially those with babies and young children. These penalties stem from income phase-ins and caps that disproportionately affect low-income families, making it harder for them to receive full benefits. H.R. 7024 proposes several key improvements:

1. Higher Credit Amounts: H.R. 7024 increases the maximum credit per child, providing much-needed financial relief to families, and adjusts the credit for inflation. This increase helps cover the essential needs of babies, such as diapers, food, child care, and health care, which are particularly costly in the early years.

2. Broader Eligibility: The bill expands eligibility criteria to include more low-income families, ensuring that no child is left behind. By extending the credit to those children who need it the most, H.R. 7024 helps mitigate the financial strain on families with babies, allowing them to invest more in their children's future.

While these measures do not entirely eliminate the "baby and child penalties," they significantly mitigate the financial burdens on families, making it a policy worth supporting.

As Chairman Wyden said:

The discrimination against families with two, three, four kids is unacceptable. Those families need help buying food, diapers, and new shoes, you name it. Today those kids are stuck splitting a single tax credit. Four kids can’t split a single pair of shoes. They should not have to wait. 

How H.R. 7024 Would Support Babies

Babies represent the most vulnerable age group, requiring substantial care and resources to ensure healthy development. H.R. 7024 directly addresses the needs of babies in several ways:

1. Enhancing Financial Support: By increasing the Child Tax Credit, H.R. 7024 provides families with more resources to cover the high costs associated with raising infants. This includes essentials like housing, child care, food, diapers, and medical expenses, which can be overwhelming for low-income and larger families.

2. Reducing Child Poverty: Public policy should strive to cut child poverty and never increase it. Unfortunately, our youngest children have the highest poverty rate of any age group in the nation. This is tragic and detrimental to their health, development, and well-being. The expanded eligibility and higher credit amounts would disproportionately lift families with babies out of poverty, providing a more stable and nurturing environment, including lower rates of child abuse and neglect, hunger, and homelessness.

3. Supporting Early Childhood Development: Financial stability allows parents to invest in quality early childhood education and care, critical for cognitive and social development. Access to books, educational toys, and early learning programs sets the foundation for lifelong success.

4. Improving Health Outcomes: Babies in financially stable households have better access to good nutrition and health care, including regular check-ups and vaccinations. This reduces the risk of illness and developmental delays, ensuring that children have the best start in life.

5. Overcoming the Shortchanging of Children: In a report issued by First Focus on Children entitled Babies in the Budget 2024, we found that the federal share of investments in babies and toddlers (ages 0-3) dropped to just 1.52% in 2024.

If we are truly concerned about child development, the well-being of our babies, and the future of the next generation, we must do a better job investing in them. Passing H.R. 7024 would be an important step in the right direction.

Protecting Children from Life's Uncertainties and Circumstances Beyond Their Control

Children should never be penalized for circumstances beyond their control, such as the birth of a brother or sister, the death or illness of a parent, accidents, natural disasters, the need for a parent to reduce work hours to provide caregiving, or the loss of a job due to business closures or layoffs.

Unfortunately, the current Child Tax Credit imposes “penalties” on children and families when a family’s income drops for whatever reason, such as the birth of a child or a hurricane.

H.R. 7024 acknowledges these challenges and aims to provide a safety net for families facing such adversities:

1. Support During Crises: By offering consistent financial support through the Child Tax Credit, H.R. 7024 ensures that families have the resources they need to navigate circumstances, such as complications related to pregnancy and childbirth, or crises, such as hurricanes, earthquakes, wildfires, floods, or tornadoes, without compromising their children's well-being.

2. Stability in Uncertain Times: Financial stability is crucial when families face unexpected hardships, such as the death or illness of a parent. The Child Tax Credit provides a buffer that helps families maintain their standard of living and continue to provide for their children's needs.

3. Caregiving Flexibility: For parents who need to reduce work hours to care for a child or ailing family member, the Child Tax Credit offers essential financial support, allowing them to prioritize caregiving without severe economic consequences.

Opponents of improving the Child Tax Credit are, in effect, complicit in penalizing children for these tragic events or situations that are beyond their control. That is wrong and unfair. Instead, by addressing these realities, H.R. 7024 ensures that children are protected and supported, regardless of their family's circumstances.

Addressing Income Inequality and Equity Concerns

It is essential to address the inequity in current Child Tax Credit policies that provide full benefits to wealthier families while offering only partial or no credit to lower-income families. This disparity not only exacerbates economic inequality but also contradicts the fundamental principles of fairness and equal opportunity.

According to a study by Columbia University’s Center on Poverty and Social Policy (CPSP), because the Child Tax Credit is tied to parental wages, there are 18 million, or 26% of all children, who are “left behind” and either qualify for partial credit (17%) or are denied the credit entirely (9%).

A previous CPSP study found that the kids “left behind” are 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.

On this point, it is critical to highlight how current tax policy explicitly values certain babies and children over others. Instead, we should be helping ensure an equal opportunity to thrive rather than the opposite.

H.R. 7024 takes steps to reduce this imbalance by expanding eligibility and increasing credit amounts for low-income families, ensuring that low-income children and their families have access to additional resources so they have a better (although still unbalanced) opportunity to succeed.

Children Should Not Be Used as Political Pawns

Reports indicate that Senate Republicans may attempt to filibuster H.R. 7024 in order to use the Child Tax Credit as a bargaining chip for a broader tax debate next year. This political gamesmanship is tragic and unacceptable. Children’s lives and well-being are too important to be delayed or used as leverage in political negotiations.

Sadly, although the public strongly supports improving child policy and believe that children are more deserving than most other groups in society, children lack political power because they do not vote, do not have political action committees (PACs), and do not have a cadre of well-heeled lobbyists advocating for their interests.

As a result, children and the policies of importance to them have been “held hostage” in the past and this must end NOW. In 2017, the Children’s Health Insurance Program (CHIP) was allowed to expire for over 100 days, which threatened the health of millions of children.

Now, seven years later, Sen. Mike Rounds (R-SD) admitted to blocking H.R. 7024 in order to use the Child Tax Credit for leverage next year. He told Semafor:

If we take away leverage on this one, it makes it more difficult to get that one done.

Our children should be protected from political “hostage-taking.” Every day without adequate financial support is another day of potential hardship and missed opportunities for millions of children.

Lawmakers also have a moral obligation to prioritize the needs of children above political maneuvering. The future of our nation depends on the health and success of our youngest citizens.

Furthermore, we know that investing in children is in our nation’s long-term economic interests, as it sets the stage for having a healthier and more educated workforce with reduced social service costs. Sadly, for too many of our policymakers, children and their families are simply not a priority, as their actions and inactions illustrate.

Unfortunately, political leaders too often pay lip-service to children and families because they know children’s issues are wildly popular with the American people, but they ignore or disregard their needs. Failure to pass laws (or even to bother to vote) and to make investments in children, such as the Child Tax Credit, would continue this tragic trend.

First Focus on Children’s annual Children’s Budget analyses and reports document this failure and declining investments in children.

Investing in Our Children, Our Future

We strongly support making important investments in our nation’s children. All children, regardless of family income or zip code, deserve a fair start in life. As an example, improving the Child Tax Credit is a matter of basic fairness and will have a high return-on-investment, ensuring that all children have the resources they need to thrive.

The Child Tax Credit should be improved to promote economic mobility by providing families with the means to invest in their children’s futures, breaking the cycle of poverty and hardship. The American people strongly agree, as poll after poll indicates. Voters see this as common-sense policy and favor improving the Child Tax Credit on a tripartisan basis (Democrats, Republicans, and Independents alike).

As we approach the Senate vote on H.R. 7024, it is crucial to rally support for this essential policy. By voting in favor of H.R. 7024, senators would take an important step toward reducing child poverty, supporting children and their families, and investing in our nation's future.

The Child Tax Credit is more than just a financial benefit; it is a lifeline for millions of families and a cornerstone for a prosperous future. The ARPA’s Child Tax Credit demonstrated the transformative power of this policy, and while H.R. 7024 does not fully replicate those benefits, it moves us closer to that ideal. Senators and advocates must come together to support this critical legislation, recognizing that the well-being of our children is paramount. It is time to put aside political differences and prioritize the needs of our youngest and most vulnerable citizens.

Our children cannot wait.

“Many things we need can wait. The child cannot. Now is the time their bones are formed, their mind developed. To them we cannot say tomorrow, their name is today.” – Gabriel Mistral

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 become a paid subscriber to help us continue our work on behalf of children.