Finding Cash for Kids: Congress failed to extend the expanded Child Tax Credit, which significantly cut childhood poverty. Now, states are adopting their own versions.

AuthorThomhave, Kalena

For Sasha Foster, a mother of two in Connecticut, the federal expanded Child Tax Credit (CTC) was particularly welcome last year. Foster was pregnant in 2020, "so to be able to have a little relief the following year helped," she says--especially because she wasn't working full time after her daughter was born. She and her husband could worry less about paying for "the normal necessities of living," such as laundry detergent and gasoline. This summer, Foster's son, who is about to enter the first grade, is looking forward to camp.

The American Rescue Plan Act, passed in 2021, made changes to the CTC that allowed most families across the country to receive a tax credit of up to $3,600 per child. The credit was fully refundable, meaning that families would benefit even if they didn't owe any taxes. It was also available to low-income parents and guardians regardless of income level--there was no minimum income threshold before benefits kicked in. For most, half of the benefit was delivered in advance over the six months from July to December 2021, and the rest was provided as a lump sum during tax season this past spring.

For a brief period, the expanded CTC reached the parents and guardians of more than sixty-one million children and reduced monthly childhood poverty by nearly a third. Then it ended, and Build Back Better--President Joe Biden's plan to boost the economy that included an extension of the credit--never passed. Without the expansion, the credit reverts to $2,000 per child, with only up to $1,500 refundable, and with an earnings requirement of approximately $12,500 to receive the full refundable credit. After 2025, the credit falls to $1,000.

Though the child tax credit is a tax credit--meaning it delivers benefits to families through the tax system--it still cannot escape being painted as a handout. Why else is it hidden away in the IRS if not to avoid being disparaged as "welfare"? Yet despite this carefulness on the part of policymakers, that happens anyway.

Republican Senator Marco Rubio of Florida alleged in a statement that the credit "scraps incentives for marriage, destroys the child-support enforcement system, and abandons requirements for work." According to HuffPost, Democratic Senator Joe Manchin of West Virginia was worried that parents would use the benefits to buy drugs. Their concerns echo the age-old, racist complaints that lazy people collect a government check instead of working.

Yet, in the absence of a...

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