The Child Tax Credit saved millions from poverty — it must be expanded

AP-Jose Luis Magana

In November, the U.S. House of Representatives passed its version of the Biden administration’s Build Back Better Act. Without Senate passage, the Build Back Better Act is now in policy limbo due to intra-party disagreement.  

The absence of one of the legislation’s most popular provisions, an extension of the expanded Child Tax Credit (CTC) benefits through 2022, is already negatively affecting millions of families and children across the nation. Without the enhanced CTC, American families risk slipping back into poverty.  

Congress still has the power and the opportunity to make good on its promise to bolster American families and children through increased opportunity and financial well-being by extending the CTC. We’ve already seen overwhelmingly positive results with the Child Tax Credit’s most recent expansion, through the American Rescue Plan of 2021, which lifted 3.7 million children from poverty this past December alone. This decrease in child poverty also has carried a widespread, equitable impact for families, with estimated reductions in poverty as high as 52 percent, 45 percent and 61 percent for Black, Latinx and Indigenous children, respectively. Prior to the passage of the American Rescue Plan of 2021, nearly half of all Black and Latinx children were excluded from the full benefit of the CTC because their families earn so little income they did not qualify for the needed benefit.  

However, as of January, families are no longer receiving a monthly Child Tax Credit, and an estimated 10 million children are expected to fall back into child poverty this year, an avoidable hardship that will negatively affect 3.8 million Latino, 2.9 million white, 2.1 million Black, 426,000 Asian and 280,000 Indigenous children.  

In 2021, parents reported immense emotional benefits from the increased Child Tax Credit payments, as well. Research administered by national polling firm Ipsos, in consultation with the Center for Law and Social Policy, revealed: “Nearly 70 percent of respondents who reported getting the monthly checks said the payments made them feel less stressed about money.” 

It should be easy for any elected official to support reducing child poverty. But despite the recent and significant national progress in that effort through the expanded CTC, 51 U.S. senators are opposed to extending it through 2022 or favor adding historically racist and burdensome work requirements in return for their stamp of approval on the Build Back Better Act. When coupled with disagreements over work requirements, party-line divisions, record inflation, the likelihood of a bipartisan agreement to move the enhanced CTC forward in 2022 remains low. However, Congress must act to protect children whose families could slip back into poverty even as the economy booms. These families are still under daily threat from COVID-19 which disproportionately impacts families and communities of color. It is urgent and imperative for Congress to be on the same page when it comes to providing desperately needed support to American families and children.  

The consequences of failing to extend the child tax credit expansions, through another version of the Build Back Better Act or no legislation at all, are dire, particularly for families of color. The Biden administration has acknowledged the “entrenched disparities in our laws and public policies” and made commitments toward advancing racial equity in their agenda. Without the expanded CTC, any opportunity to Build Back Better could leave behind millions of families and children.  

Congress must now decide whether to leave American families and children with a broken promise of increased opportunity for financial well-being and equity or to act immediately by extending the CTC expansion. We urge lawmakers to consider the negative impact the absence of the enhancement of this earned benefit would have on low-income and working families across the country and act accordingly.  

The results of the 2021 CTC were clearly effective in reducing poverty. Now, the economic fate of 10 million children and their families’ rests within the hands of the Senate to act again. The nation is waiting, but our children can’t wait any longer.  

Gary Cunningham is president and CEO of Prosperity Now. Since 1979, Prosperity Now has worked to make it possible for millions of people, especially people of color and those of limited incomes, to achieve financial security, stability and ultimately, prosperity.

Tags American Rescue Plan Act Build Back Better Act Child tax credit CTC Joe Biden Poverty Presidency of Joe Biden Tax credits Taxation in the United States

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