Among cuts to President Joe Biden’s “Build Back Better” reconciliation plan is the enhanced monthly child tax credit. Right now, it looks like the CTC will only be extended for another year, instead of the four years originally proposed. In addition, Senator Joe Manchin (D-WV) is proposing an income cap of $60,000 per year for families eligible to receive the enhanced credit. This would mean that more than 37 million children across the country would lose access to the credit, which currently offers $300 per month to qualifying children under 6 years old and $250 per month for children ages 6 and up.
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Earlier this year, the CTC was increased from a total of $2,000 per child to $3,000 per child 6 and up and $3,600 per child under 6, with half the amount offered as an advance. Economists say that if it were extended through 2025, the enhanced CTC could reduce the child poverty rate from 14.2% to 8.4%, according to a recent report from the Urban Institute. That would mean nearly 40% fewer children across the U.S. living in poverty.
Manchin’s upper income limit of $60,000 to receive the credit, however, does not take into account families of varying sizes or the higher costs of living in many cities and regions. In all but 12 of GOBankingRates’ study of 50 major cities, homeowners and renters alike needed more than $60,000 to “live comfortably.” The study addressed individuals, not families, which means the money needed to live with children in these metro areas would exceed the income for a single person, or even a couple.
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When you look at the median income in these cities, 38 fall under Manchin’s $60,000 threshold. However, that’s just the median, which could leave close to 50% of all families potentially exceeding that $60,000 income mark — but still not reaching the income level to live comfortably with kids.
Take the city of Charlotte, North Carolina, which has a median income of $58,202, just under Manchin’s “magic number” of $60,000, as an example. To live comfortably as a homeowner, you’d need to earn at least $80,071, while renters need $82,999.
GOBankingRates used the 50/30/20 metric to define “living comfortably” in these cities, which means that 50% of your income goes toward necessities, leaving 20% for savings and investments and 30% for splurges and fun.
Even in cities where salaries skew higher, more than 50% of people are barely “making it” financially. ” Austin’s median income of $63,717 for individuals exceeds Manchin’s upper limit for the child tax credit, yet homeowners need $98,007 to live comfortably in the up-and-coming tech hub, while renters can get by on $94,455.
In 25 U.S. states, $60,000 annual income is not even enough to qualify for middle class as a family of four, according to another GOBankingRates study. By reducing the upper income limits for the CTC, Manchin’s proposal does not take into account the cost of living in different areas, different size families or the amount of money it actually takes to avoid poverty in the U.S. today.
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Last updated: October 22, 2021