By Karl Polzer
Jhe federal government’s refusal to extend the expanded Child Tax Credit — which, for a year, was offered to far more low-income families than in the past — reveals a bias that runs deep in both political parties. In the framework of spending prioritiesmembers of Congress seem to think that children and families at the bottom of the economic pyramid are worth less than those above them.
As COVID-19 ravaged the country, Congress made the Child Tax Credit more fair and inclusive. The U.S. bailout temporarily increased the credit to $3,000 ($3,600 for each child under 6) and made it fully refundable, allowing more low-income families to benefit . These changes expired at the end of 2021.
law now come back the provisions of the Tax Cuts and Jobs Act of 2017, by which Congress increased the credit from $1,000 to $2,000 per child for couples earning up to $400,000. As before 2021, those too poor to pay income taxes in 2022 can receive up to a maximum of just $1,400. And those earning $2,500 or less aren’t eligible for any benefits.
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Spending on child tax credits is once again heavily skewed towards middle- and upper-income families. In 2019, the Tax Policy Center estimated taxpayers with annual incomes between $100,000 and $200,000 received the largest credit — more than $3,000 on average.
Families with an annual income of less than $20,000 received a credit of less than $1,000. Those who earned less than $10,000 received on average only $250.
Unless Congress acts, a low-income family with two children — awaiting their final installment of a $6,000 to $7,200 credit for the 2021 tax year — will only be able to receive a small fraction of that amount for 2022. Some families might get nothing if Congress decides to impose work requirements proposed by Sen. Joe Manchin, DW.Va., and others.
The US bailout temporarily increased tax credits for over 65 million (about 90%) US children. Previously, 27 million children – including about half of black and Latino children and half of young people in rural communities – received less than the full amount of credit.
Whereas consequences of congressional inaction will be negligible for high-income families and manageable for middle-income households, severe for most low-income families. Both political parties bear the responsibility.
Many Republicans support cutting aid for low-income families. Some prefer strict working conditions to receive the child tax credit.
Sen. Mitt Romney, R-Utah, a family advocate, is an exception. Romney has proposed replacing the child tax credit with a near-universal child-rearing grant, administered by the Social Security Administration.
For their part, Democrats have nested the expansion of the expanded child tax credit inside the seemingly forgotten ‘Build Back Better’ bill — a conglomeration of initiatives, many of which would mainly benefit people with middle and upper incomes. Both parties have always supported tax relief and exclusionsespecially for social benefits, which recycle taxpayers’ money to high-income groups, while providing much smaller benefits to low-income families.
Asked about his repeated refusal to support relief for struggling families, Sen. Ron Johnson, R-Wis. – one of the richest members of Congress – recently said he “never really felt it was society’s responsibility to take care of other people’s children”. If Johnson really believes that, why isn’t he leading a charge to get rid of the Child Tax Credit altogether – especially since the lion’s share of lost income goes to families who don’t need it? ?
The national debt has just soared above $30 trillion. There are good reasons to target spending wisely, especially among Republicans.
Ensuring that low-income families have the resources to raise functioning children is very important to national productivity and security. Nearly half of America’s future workforce under age 6 is growing up in poor or near-poor families.
Families in the lowest 10th percentile have 15 times less annual income than children in the 90th percentile. About 42% of births in the United States are paid for by Medical helppublic health insurance for low-income Americans.
Congress shouldn’t let any more time pass before getting back to work on the child tax credit. Money could be saved by reducing amounts to between $2,000 and $3,000 per child and gradually targeting funds to low-income families.
Tax credits (or other subsidies) could also be weighted in favor of younger children, who require the most parenting time and expensive daycare so parents can work. Parents of young children are generally in the early stages of their careers and, on average, they have lower income than parents with older children.
If lawmakers decide to add a work mandate, it could be relaxed to only require part-time paid employment for low-income single parents. They might have the hardest time earning a living wage since they don’t have a partner.
Alternatively, low-income parents facing work demands could receive adequate subsidies for child carewhich, by the way, would be much more costly for taxpayers than the 2021 credit amounts.
Romney and other leaders realize that work does not need to be paid to be of great value to society. Raising children is hard work and perhaps the most important contribution that parents make to the country. Having enough time to raise their children should not disqualify parents or carers to obtain the government assistance that those who are financially better off receive.