Last year saw the largest one-year reduction of child poverty in history. It is important to note, however, that these child tax credit provisions expired at the end of 2021.
Families pay for rent, food with child tax credit
Families are starting to spend money from the expanded child tax credit. That includes Brianne Walker, who is raising five children on her own, including two siblings in her custody. She used her first check to make a late rent payment. (July 29)
AP
Picture it: The holidays are just around the corner. While most people are searching online for “holiday gift guides,” some families are looking up “local holiday meal distribution free” and “utilities assistance.”
Despite all the recent attention on who will control the next Congress, the current Congress can still make history again this year and address these issues by using a method that has been implemented before, is proven to work and is already on the table.
Last year, the expanded child tax credit with monthly payments became available to 65 million children in a record nearly 40 million families across the United States. This single piece of legislation helped lift 5.3 million Americans out of poverty, including 2.9 million children.
Child poverty fell by a miraculous 46% last year
An expansion took into account a household’s number of children and income from the prior tax year and provided a monthly income boost dispersed throughout the year from half of a family’s child tax credit. In prior years, families had to wait until tax season and would struggle to make ends meet until they could receive the full one-time tax break.
According to U.S. census data, child poverty fell by a miraculous 46% last year. In fact, this was the largest one-year reduction of child poverty in history. It is important to note, however, that these child tax credit provisions expired at the end of 2021.
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Despite some serious misgivings from some prominent members of government fueled by negative stereotypes, studies have shown that the monthly child tax credit payments worked as intended. It helped to mitigate financial burdens for low-income families, which often disproportionately harm marginalized communities.
The new provisions helped to accommodate for historic economic injustices: The percentage of children living below the federal poverty line fell to the lowest rates on record for non-Hispanic white (2.7%), Black (8.1%) and Hispanic (8.4%) children. Many parents used this freedom and flexibility to cover things such as child care, clothes and transportation costs.
According to the Census Household Pulse Survey:
- 30% of families receiving the child tax credit spent it on school expenses.
- About 25% spent it on child care costs.
- 40% of households were able to pay down debt.
- Half the participants spent at least some of the credit on food.
- 40% spent it on things such as rent, mortgage or utilities.
The Center on Budget and Policy Priorities found that more than 90% of families making less than $35,000 a year used their monthly child tax credit payments for the most basic of expenses, including food, clothing, shelter, utilities and education.
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What’s the bad news?
The fact of the matter is this program worked! It did exactly what it purported to do, and it did it well. So, what’s the bad news?
Since these provisions expired in December 2021, nearly a year ago, parents are now less able to afford child care, forcing some of them to leave the workforce to care for their children. To top it all off, global inflation has made the most basic necessities (including food and utilities) more expensive – something we’re sure you’ve probably already noticed.
The high cost of living, amplified by inflation, combined with the looming will-they-won’t-they threat of a recession and a housing crisis, is not looking to magically improve on its own any time soon.
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All of these things are having devastating effects on those already experiencing financial hardship. When comparing the first half of September 2021 (with the expanded child tax credit in effect) to the first half of this October (without the expanded credit), the number of adults who reported that they were not working chiefly because they were caring for a child not in school or day care increased from 4.4 million to 4.5 million.
Furthermore, the number of families with children who reported sometimes or often not having enough to eat increased from nearly 9 million to more than 11 million nationwide.
How’s that for a holiday season?
Big Business wants Congress to extend tax breaks for wealthy corporations. This has bipartisan support, but it would be unconscionable to forget about the tens of millions of American families struggling to make ends meet.
Last year, we achieved a historic reduction in child poverty. We can do it again.
Brendan Bow volunteers with RESULTS to advocate against poverty, works as a program analyst at the Center for Research on Inclusion and Social Policy and serves as adjunct faculty at IUPUI (Indiana University–Purdue University Indianapolis). Ruhani Sansoya is a third-year medical student at IU School of Medicine and advocates with RESULTS. RESULTS is an organization committed to ending poverty.
