Racial justice organizations call on Congress to restore child tax credit
A protest organized by the ParentsTogether Foundation in support of the Child Tax Credit portion of the Build Back Better Bill outside the United States Capitol on December 13, 2021.
Sarah Silbiger/Bloomberg via Getty Images
How the child tax credit has helped families
The Child Tax Credit was enhanced as part of President Joe Biden’s U.S. bailout signed into law in March 2021. In the last six months of 2021, families with eligible children received monthly payments of up to $300 per child through the credit. The second half of the credit went to families this year in the form of a tax refund.
The benefits of subsidized credit were widespread, reducing child poverty, food insecurity and financial anxiety for millions of families with children. These findings were greatest for black and Latino children.
Making the credit fully refundable — meaning families with no or very little earned income could still receive its full value — extended the benefit to 27 million children, according to data from the Center on Budget and Policy Priorities. This included half of black and Latino children who previously did not qualify for the credit or only got a partial benefit.
When credit enhancements expired at the end of 2021, the benefits families received through monthly checks were quickly reversed. Millions of children have fallen back into poverty, the Center on Budget and Policy Priorities found, and food insecurity and financial instability have rebounded. Today, amid the highest inflation in about 40 years, about half of low-income families are struggling to buy enough food without the credit.
“While the poverty rate for white children will also rise, it will nonetheless remain nearly two-thirds lower than that for black and Latino children,” the letter from racial justice organizations said. “It is simply unacceptable.”
What’s next for the Child Tax Credit
Of course, the regular child tax credit is still available to families with qualifying children. Instead of getting advanced monthly payments and the higher amount of the enhanced benefit, families can claim the initial credit, which is up to $2,000, when they file their 2022 tax return. ‘next year.
The enhanced child tax credit was included in Democrats’ Build Back Better plan, a roughly $1.75 trillion economic bill that failed to pass the Senate. Now, as Democrats try to rework the proposal, the improved child tax credit is in play – it was one of the initiatives President Biden was prepared to drop the legislation in an attempt to push it through.
There are two elements of the improved delivery that defenders would like to see continue. The first is the credit’s full refundability, which has allowed it to reach more children than ever before.
“These are the children who struggled the most and for whom the CLC made the most difference, and who were really left behind by the expiry,” said Adam Ruben, director of the economic security project.
The second element that proponents want to preserve is monthly payments, which helped families meet day-to-day expenses, he added.
Extending subsidized credit to 2025 would have significantly reduced child poverty and saved more than 4 million children from living in poverty, according to the Urban Institute.
“Poverty is a political choice,” the organizations wrote in the letter. “Allowing millions of children, including more than 2.5 million black and Latino children, to fall back into poverty is also a political choice.
REGISTER: Money 101 is an 8-week financial freedom learning course, delivered weekly to your inbox. For the Spanish Dinero 101 version, click here.
Disclosure: NBCUniversal and Comcast Ventures are investors in tassels.