For true American prosperity, make the child tax credit permanent

For true American prosperity, make the child tax credit permanent
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Last week, millions of families — 35 million, in fact — began to receive monthly advance child tax credit (CTC) payments. These payments, which amount to $300 per month for each child under 6 and $250 per month for each child between the ages of 6 to 17 from July to December, are likely to have a long-lasting positive effect on families and children throughout the country.  

According to the researchers at the Center on Poverty and Social Policy at Columbia University, the monthly CTC payments may cut the number of children living in poverty by 45 percent. Furthermore, these payments will reduce the rate of Black, Latinx, and Native children living in poverty by 52.4 percent, 45.4 percent and 61.5 percent, respectively.  

Even prior to the pandemic, a whopping 37 percent (forty-five million) of all U.S. households were considered “liquid asset poor,” meaning that if these households suddenly lost their ability to earn an income, they did not have the resources to subsist for three months at the federal poverty level. Liquid asset poverty also disproportionately affects families of color. According to our research, 58 percent of all Black and Latinx households were in liquid asset poverty before the pandemic, and these numbers likely increased after COVID-19. The one-year expansion of the CTC in the American Rescue Plan also temporarily removed considerable barriers faced by families toward receiving a CTC. About half of all Black and Latinx children received only a partial CTC or no credit at all because their families’ incomes were too low to qualify.  

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Through our Right-Side-Up Campaign, Prosperity Now has fought for inequality by turning our upside-down tax programs that benefit wealthy families and corporations right-side-up to support low- and moderate-income households, especially households of color. Making the expansions to the CTC permanent is a first step towards making our tax system work for all families. "We want the tax code to lift our low-income families up, and it wasn't doing that,” stated Prosperity Now’s Associate Director of Policy Joanna Ain, in a recent CBS News piece

It is no surprise that policymakers, economists and cabinet officials support extending or keeping this benefit. In USA Today, Sens. Cory BookerCory BookerWomen urge tech giants to innovate on office return Human rights can't be a sacrificial lamb for climate action Senate Democrats press administration on human rights abuses in Philippines MORE (D-N.J.), Michael BennetMichael Farrand BennetLawmakers can't reconcile weakening the SALT cap with progressive goals How Sen. Graham can help fix the labor shortage with commonsense immigration reform For true American prosperity, make the child tax credit permanent MORE (D-Colo.), Sherrod BrownSherrod Campbell BrownNew spotlight on secretaries of state as electoral battlegrounds Top Democrat: 'A lot of spin' coming from White House on infrastructure Schumer's moment to transform transit and deepen democracy MORE (D-Ohio) and Raphael WarnockRaphael WarnockJesse Jackson arrested with voting rights protesters at Capitol Harris's bad polls trigger Democratic worries ObamaCare 2.0 is a big funding deal MORE (D-Ga.) wrote, “Congress and President BidenJoe BidenFive takeaways from the Ohio special primaries FDA aims to give full approval to Pfizer vaccine by Labor Day: report Overnight Defense: Police officer killed in violence outside Pentagon | Biden officials back repeal of Iraq War authorization | NSC pushed to oversee 'Havana Syndrome' response MORE must act to make these provisions [CTC and EITC expansions] permanent.”

Congresswoman Rosa DeLauroRosa DeLauroHouse bundling is bad for deliberation House adjourns for recess without passing bill to extend federal eviction ban House clears .1 billion Capitol security bill, sending to Biden MORE (D-Conn.), who supports the inclusion of the expanded CTC in a future infrastructure package, recently said, “We have a real opportunity here, not to just throw money at a problem, but to build an architecture for the future and use this as a moment to lift up all children and families.” 

On July 15, Treasury Secretary Janet YellenJanet Louise YellenYellen tries to tamp down Democrats fury over evictions ban On The Money: Biden, Pelosi struggle with end of eviction ban | Trump attorney says he will fight release of tax returns Yellen to brief House Democrats on Tuesday on rental aid MORE expressed support for making the CTC permanent, telling NPR, “I think this is something that's very important to continue.” 

It is important to remember how COVID-19 disproportionately affected low-wage and minority workers — and continues to do so. Between February and April of 2020, employment declined by 16 percent for Black workers and 20 percent for Latinx workers. While the U.S. labor market added more than 800,000 jobs in June 2021, unemployment rates for Black, Asian and Latinx Americans increased. 

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In a recent interview with CNBC, University of Maryland economist Melissa Kearney said, “Frankly, this is one of the best ways the federal government can and should be spending money from the perspective of social return.”

Families are spending their new tax credits in different ways, based on their current needs, which TIME explores in its article “Sneakers, Rent, and Childcare: How Seven Families Plan to Spend the Expanded Child Tax Credit”. According to one family in Massachusetts, the CTC will help subsidize childcare costs because “[Childcare’s] a huge expense for us. It’s bigger than our mortgage.” Even though annual childcare costs can vary significantly by state ($24,243 in the District of Columbia and $6,001 in Alabama), it is still a high price tag for working families.  

Whether families choose to spend their new, expanded monthly tax credit on basic necessities, childcare services or college savings, their future will look even brighter if the CTC is made permanent. In her CNBC interview, Kearney suggested that, if made permanent, the CTC program could be run through an existing government agency — the Social Security Administration: “We could have a streamlined spending program that we could commit to in the federal budget, and then families wouldn’t have to do this really complicated dance of figuring out how this affects their overall tax credit.”  

At Prosperity Now, we believe that everyone deserves a chance to prosper, and making the CTC permanent for families is a necessary first step toward giving tens of millions of people that opportunity.  

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.