Making the Child Tax Credit Permanent Would be a Boost to the Economy, According to Some Experts
The IRS will start disbursing the expanded Child Tax Credit in the form of monthly payments on July 15, which will translate into approximately $250 to $300 for parents, but only through 2021. Now, several Democrats and experts are pushing to make the expansion permanent, arguing it would boost the economy, help women return to the workforce and lift millions of children — especially children of color — out of poverty.
“A permanent extension of the expanded Child Tax Credit would not only be good for millions of families, it would also be a massive shot in the arm for the overall economy & help put us on track for long-term growth that benefits everyone, not just the wealthiest few,” the coalition Fighting Chance for Families — an effort from Data for Progress and Groundwork Collaborative, according to The Hill — tweeted last week.
A permanent extension of the expanded Child Tax Credit would not only be good for millions of families, it would also be a massive shot in the arm for the overall economy & help put us on track for long-term growth that benefits everyone, not just the wealthiest few.
— Fighting Chance For Families (@ExpandCTC) July 2, 2021
Under the American Rescue Plan, the Child Tax Credit will be fully refundable, meaning that if a family’s income tax bill is less than the amount of their Child Tax Credit, they will get a payment for the difference, according to the White House’s fact sheet.
“In 2021, for most families, the Child Tax Credit is increased to $3,000 for each child between 6 and 17 years old and to $3,600 for each child under age 6. For example, a married couple making less than $150,000 with two children under age 6 will be eligible for a Child Tax Credit of $7,200 in 2021 – at least $3,200 more than they would have received prior to the American Rescue Plan,” according to the fact sheet.
The Center for American Progress argues that while this legislation lays the groundwork for Congress to make permanent, transformative changes, including a permanent child allowance, “if Congress acts later this year to extend the CTC or make it permanent, the monthly payments of the credit could continue past December 2021 and provide needed support to workers and their families.”
In addition, the Center for American Progress argues that making the CTC into a permanent child allowance would support families and children who have disproportionately faced economic harm during the pandemic, as during the peak of the recession in April 2020, the proportion of children with at least one unemployed parent reached its highest rate in 50 years.
“Between 5 million and 9 million children lived in households where they did not eat enough because their families could not afford food, and 1 in 3 adults in households with children reported difficulty covering usual expenses such as rent, food and medical costs,” according to the Center. “Additionally, due to systemic racism and marginalization, Black and Latino children were the most likely to experience these harms.”
Several other organizations are urging the Biden administration to make the CTC permanent, including The Children’s Defense Fund. In a letter to Congress, the Fund states that the expansion has the potential to reduce poverty and advance racial equity significantly–making it permanent would help reduce these long-standing disparities. The fund further says in the letter that according to the Center on Poverty and Social Policy at Columbia University, the expansion may move as many as 45% of children living in poverty above the poverty line and reduce racial disparities in child poverty — cutting Black child poverty by 52%, Hispanic child poverty by 45%, Native American child poverty by 62%, Asian American and Pacific Islander child poverty by 37%, and white child poverty by 39%.
Several senators are also pushing for the permanency of the CTC, including Sens. Michael Bennet (D-Colo.), Sherrod Brown (D-Ohio), Cory Booker (D-N.J.), Ron Wyden (D-Ore.) and Raphael Warnock (D-Ga.), who led 41 Senate Democrats “in a push to build on the success of the American Rescue Plan Act by making critical tax credits for families and struggling workers permanent,” according to a statement.
“The expansions of the Child Tax Credit and the Earned Income Tax Credit in the American Rescue Plan are the most significant investment in America’s families and workers in generations. The one-year expansions will cut child poverty nearly in half and boost incomes for workers without kids. To let these changes expire after only one year would be a disgrace,” Bennet said in a statement. “By making these expansions permanent, we can provide long-lasting support for America’s kids and workers, and build an economy that works for everyone, not just the people at the very top.”
The effort is however being met by some Republican resistance, including that of Sens. Marco Rubio and Mike Lee, who said in a joint statement that “we do not support turning the Child Tax Credit into what has been called a ‘child allowance,’ paid out as a universal basic income to all parents. That is not tax relief for working parents; it is welfare assistance. An essential part of being pro-family is being pro-work. Congress should expand the Child Tax Credit without undercutting the responsibility of parents to work to provide for their families.”
Tom Wheelwright, CPA and author of Tax-Free Wealth, echoes their sentiment, telling GOBankingRates that while the Democrats in Congress and the White House would like to see this become permanent and that it’ll be part of their budget bill, “this is the first attempt at universal basic income. It is also an incentive for people to have more children. All tax breaks are incentives to do what the government wants done. In this case, it appears the government is concerned about lower birth rates,” he says.
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Last updated: July 12, 2021