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The Child Tax Credit Empowered Parents, Lifting 3 Million American Kids Out of Poverty 

  • In 2021, child poverty fell to its lowest level ever in America as low-income parents were able to catch up on food, bills, and rent.   

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Prioritizing Families

The expansion of the Child Tax Credit has been the most successful program since WWII at ensuring parents have the support they need to lift themselves and their children out of poverty. This bi-partisan program empowered parents to make ends meet and gave them the flexibility to spend the cash on what their family needed most, whether that was childcare, housing, or healthy food. The cascading benefits of the program enabled parents to catch up on bills, food, and rent—stabilizing low-income homes across the country and lifting 3 million American children out of poverty!

The program's success received broad support from Americans across the ideological spectrum.  Conservative evangelicals, liberal progressives, and a vast swath of the silent majority of America sitting in the middle all understand that it serves no one for a child to start their lives anchored in deep poverty. 

Americans know that growing up in poverty is one of the biggest barriers to a child's ability to claim the American Dream and reach their God-given potential. It's why our nation has always take special steps to protect our children and invest in programs that ensure a more equal opportunity for all.

But partisan posturing in Washington blocked a continuation of the tax credit.  As a result, childhood poverty spiked back up 41% this past year.  The kids thrown back into poverty because Congress won't act are not a statistic.  Each has a face and prospects for a future that are now dimmed. 

 

Nevertheless, that tragic statistic also highlights just how effective this program can be.  The families of nearly half of the children lifted out of poverty by the Child Tax Credit have been able to avoid falling back into poverty.

Kids who have enough to eat, do better in school and have fewer health complications.  For a poorer working parent without leave, that can make the difference between keeping a job or losing it to take time off for a kid at home. 

 

When parents don't have to stay up late night after night trying to figure out how they will make ends meet, they can work harder and better.  Marriages are less likely to end in divorce when financial strains are lessened.  Parents have a little room to save for the unexpected complications.  

 

The Child Tax Credit is good policy that protects our children, supports families, and provides an equal benefit to all.    

"I lost my job during the pandemic, and my wife and I had to deplete our savings to help pay the costs of raising our family. I'm now working full-time again, and the tax cut our family received thanks to the expanded Child Tax Credit is helping us build our savings back again so we'll be able to face the unexpected expenses that come with raising four kids." — Benny, Arizonan and proud father of four

One-Year Child Tax Credit Expansion

In 2021, President Biden signed the American Rescue Plan into law, which included the One-Year Child Tax Credit Expansion.  All parents were treated equally and received the same tax credit.  But the credit had a much bigger impact on the ability to struggling families making only $20,000 than it did for those making $150,000.  That is why it was so effective at lifting children out of poverty.  

The expanded Child Tax Credit gave each parent a tax credit worth $3,000-per-child ($3,600 for children under age 6). Importantly, it made the credit fully refundable for families, ensuring that families struggling the most could fully access the extra help. Additionally, the IRS began issuing monthly payments to families from July to December 2021, covering half of the credit in advance, and ensuring it was spread out and easier to fit into family budgets.

The Expanded Child Tax Credit played a crucial role in preventing millions of children from going hungry as well. Within a week of its implementation, the percentage of households with children experiencing food scarcity dropped from 13.7% to 9.5%. Spending reports indicated families who benefited from the new tax credit utilized it to buy clothing, food, household items, and pay for other necessities for their children and school. 

 

An analysis conducted by the Urban Institute revealed that making the expanded Child Tax Credit permanent would reduce child poverty by an additional 40%, benefiting more than 4.3 million children. Many tax economists assert that the American Rescue Plan Act has had a more significant impact on protecting our children than most other policies implemented in the past 50 years, safeguarding lives across the country.

Economist Hunger Chart

With the benefits to American families so clear, religious leaders across the country have implored our elected officials to make the expanded Child Tax Credit permanent. The Conference of Catholic Bishops wrote, “Especially in this moment of economic uncertainty, we urge you to take action to ensure the progress made in the fight against child poverty this past year is not lost and that we build on these gains."

The National Association of Evangelicals, Georgetown University’s Center on Faith and Justice, the Episcopal Church; Bread for the World; and the Evangelical Lutheran Church in America also rallied behind the Child Tax Credit, invoking the Gospel of Matthew and urging lawmakers to care for the “least of these.” They concluded, "To pass a reconciliation bill without including a permanent and fully refundable Child Tax Credit would be morally indefensible.”

GOP Refused to Renew Expanded Child Tax Credit

Unfortunately, the one-year child tax credit expired at the end of 2021 due to opposition from Republicans. Many of them claimed it was too expensive.

 

As a result of the partisan posturing, families can now only receive up to $2,000 per child under 17 years old, and the credit is only partially refundable.

 

Child poverty surged by 41% in January 2022, the first month without the expanded tax credit. 

New Bills Would Make Child Tax Credit Expansion Permanent

While American families did not benefit from the child tax credit expansion in 2022, U.S. Representatives Rosa DeLauro, Suzan DelBene, and Ritchie Torres have reintroduced the American Family Act, which would ensure that the expansions made with the 2021 American Rescue Plan would become permanent.  

 

In the Senate, Senators Sherrod Brown, Corey Booker, Michael Bennet, Ron Wyden, and Raphael Warnock are also expected to introduce the Working Families Tax Relief Act (WFTRA). If passed, the act would make the American Rescue Plan’s successful expansion of the Child Tax Credit and Earned Income Tax Credit permanent. 

The proposed Child Tax Credit expansion would restore the credit to $3,000 for children 6-17 years old, and $3,600 for children 5 years and younger, as it did under the initial expansion. Additionally, the credit will again be “fully refundable,” meaning that all American families are eligible for the full credit value. Again, there will be monthly credit payments to provide families with a reliable source of financial stability through uncertain economic circumstances.

 

If either bill passes, countless American families will benefit from the child tax credit and monthly advance payments in the coming years. Parents will be able to better provide for their children, poverty will decrease, and millions of kids will go to bed with full bellies and stable housing. 

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