Child Tax Credit’s Extra Help Ends, Just as Covid Surges Anew

That didn’t happen. Polls showed that the public was roughly divided on whether the program should be extended, with opinions divided along party and generational lines. And the expanded tax credit failed to convince the person whose opinion mattered most: West Virginia Democrat Joe Manchin III, who cited concerns about the program’s cost and structure in his decision to oppose. against Mr Biden’s climate, tax and social security policy. policy note. The bill, known as the Build Back Better Act, cannot pass in the evenly divided Senate without Mr. Manchin’s support.

For child support supporters, the lack of renewal is especially frustrating because the program itself has been a remarkable success, according to most analyses. Columbia University researchers estimate that the payments lifted 3.8 million children out of poverty in November, a nearly 30 percent drop in child poverty. Other studies have found that the benefit reduced hunger, reduced financial stress among recipients and increased overall consumer spending, especially in rural states that received the most money per capita.

Last spring, the congress expanded the existing children’s discount in three ways. First, it made the benefit more generous, at a whopping $3,600 per child, up from $2,000. Second, it started paying the credit in monthly installments, usually deposited directly into recipients’ bank accounts, turning the annual windfall into something closer to the child support common in Europe.

Finally, the bill made the full benefit available to millions who previously could not take full advantage of the credit because they earned too little to qualify. Poverty experts say change, known in tax jargon as “full repayability,” was particularly important because without it, one-third of children — including half of all black and Hispanic children, and 70 percent of children raised by single mothers – it didn’t. receive the full credit. Mr Biden’s plan would have made that provision permanent.

“What we’ve seen with the child tax credit is a policy success story that was unfolding, but it’s a success story that we risk stopping the moment it started,” said Megan Curran, policy director at Columbia’s Center on Poverty and Social Policy. “The weight of the evidence here is clear in terms of what the policy is doing. It reduces child poverty and food shortages.”

But the expanded tax credit doesn’t just go to the poor. Couples who earn as much as $150,000 a year can receive the full benefit of $3,600 — $3,000 for children ages 6 and older — and even wealthier families qualify for the $2,000 original credit. Critics of the policy, including Mr Manchin, have argued that there is little point in providing aid to relatively wealthy families. Many supporters of the credit say they would like to limit its availability to wealthier households in exchange for its maintenance for poorer ones.

Mr Manchin has also publicly questioned the wisdom of unconditional cash payments and privately expressed concerns that recipients could spend the money on opioids, comments first reported by The Wall Street Journal and confirmed by a person who familiar with the discussion. But a Census Bureau survey found that most recipients used the money to buy food, clothing or other necessities, and many saved some of the money or paid off debt. Other studies have found similar results.

Comments are closed.