The Future of the CTC
(The Child Welfare League of America, John Sciamanna)
The Democratic strategy to try and keep as much and as many parts of the original House reconciliation bills, meant that many program will be reduced in length. Perhaps the prime example is the fate of the Child Tax Credit (CTC). Continuing and making permanent the CTC has been one of CWLA prime issues this year.
In the end to get the votes of two hold out Senators the CTC has to be reduced in length down to maybe as little as a one-year extension. That would make its extension again, a top priority for many groups, including CWLA, in 2022. Senator Joe Manchin (D-WV) had several objections to the CTC including extending it for very long and allowing refundability which allows the credit to lift children out of poverty. Some of the restrictions proposed (and opposed) have included limiting it to families making $60,000 or less and the limits on refundability which has been promoted as “work requirements.”
Conservatives have argued there must be a work requirement or people will drop out of the workforce, but other economists have pushed back to offer evidence it actually increases work participation. See Fortune Magazine Leah Hamilton opinion, “Notably, 94% of respondents said that they plan to use the credit to either work more or maintain the same hours and a quarter planned to use the credit to cover childcare expenses while they worked.
A new analysis by the Center on Budget Policy and Priorities shows that families with incomes at $35,000 or less are spending 91 percent of their credit funds on one or all of these: food, utilities, rent/mortgage payments, clothing, and education. Families are making these investments nationwide: in every state and the District of Columbia, large majorities of low-income families are making such use of the credit. The Center study is based on a new analysis of Census Bureau data covering the first three months of payments. The analysis breaks down this spending by state.
Critics argue that by providing a family with a $300 credit per child five and younger or $250 per child aged 6 to 17, will discourage a parent(s) from working. Such a “work” requirement could be called a “parent penalty.” For a working single parent that $300 is not enough to live on but it could make the difference between being able to pay for an unexpected car repair that is their only source of transportation to their job. It may also help prevent making difficult choices between competing needs such as the utility bill, prescription medication or groceries.
Most important, if more than 4 million children are lifted above the poverty line. What impact will there be on the country over the long term if millions of children do not grow up in poverty in the critical early childhood developmental years?
