Financial Lifeline: Reviving the Expanded Child Tax Credit
A Safety Net for Families
Brittani Barnett, a single mother of three from Charlotte, N.C., still remembers the sense of financial security she felt when she received an extra $300 per month from the expanded child tax credit in 2021. The supplement allowed her to provide for her children’s basic needs and even helped her son with a down payment on a car.
A Critical Support System
The expanded child tax credit, introduced under the American Rescue Plan Act, provided families with $3,600 for every child under 6 and $3,000 for every child between 6 and 17. The relief package made the credit fully refundable, eliminating minimum income requirements that previously excluded the poorest families from qualifying for the full credit. Half of the credit was distributed to families in monthly installments from July 2021 to December 2021.
Fighting Poverty and Hunger
The expanded credit showed remarkable results in fighting poverty and hunger. The child poverty rate hit a historic low of 5.2% in 2021, while food insufficiency among low-income families dropped by 25%. Parents were able to stay current on their bills, build savings, and even start businesses.
Creating Positive Moments
Phone interviews conducted by The Center for Law and Social Policy (CLASP) revealed that parents were able to create positive moments for their children, such as throwing birthday parties or affording instruments for school bands. “It was also helping parents to be able to say yes to a lot of these experiences that their children wanted,” said Ashley Burnside, a senior policy analyst at CLASP.
A Lifeline for Families
Crystal D., a single mother in Grand Blanc, Mich., was able to pay for private tutoring and mental health services for her 9-year-old son with the pandemic child tax credit expansion. Now, she spends her time searching for alternate ways to provide those services due to the credit’s expiration.
The Consequences of Expiration
Since the expanded child tax credit expired, the child poverty rate has more than doubled, reaching 13.7% last year. The Harris campaign proposes not only reinstating the expanded credit but also providing new parents with $6,000 for the first year of their baby’s life.
A Long-Term Investment
According to a Tax Policy Center analysis, the expanded child tax credit would largely benefit low- and middle-income households. While it would reduce tax revenue by nearly $1.6 trillion between 2025 and 2034, the long-term effects may be worth the cost. A working paper released this summer found that making the credit permanent would lead to higher future earnings and tax payments, better health and longevity, and a drop in healthcare, crime, and child protection costs.
A Better Benefit for Society
The benefits of the expanded child tax credit outweigh the costs nearly 10 to 1, largely due to making the credit fully refundable. As Lauren Reliford, policy director at the Children’s Defense Fund, noted, “When a parent actually gets to spend time with their child, [that] is actually really vital for optimal outcomes as you become an adult.”
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