Child Tax Credit Improvement Should Take Precedence Over Tax Breaks To Corporates Flush With Funds: Here’s Why You Are Not Getting The CTC Payments Any More

child tax credit

Parents who faced the pandemic remember the tough times they faced especially when it came to providing for their families. But in a remarkable turn of fate, the economic impact payments were followed by another round of payments that proved to be a lifesaver; the expanded version of the Child Tax Credit payments. 

The period between July and December 2021 was especially a sea change from the tough times they faced through the pandemic. Even as the economic downturn continued to haunt low and moderate-income Americans, the Child Tax Credit, or to be more accurate, its 2021 version came as an unexpected gift. 

The expanded Child Tax Credit provided a few hundred dollars to parents to help pay for their children’s immediate needs. And there was enough to even pay off their debts. But the checks suddenly stopped, as abruptly as they had begun. 

Parents struggling to manage their finances were able to provide for their children’s childcare even as they juggled work or advanced their qualifications. But once the Child Tax Credit checks stopped, the extra hours that parents managed stopped, and they were back to their old stressful ways again.

President Biden Had Not Envisaged Such An Abrupt End To The Child Tax Credit

When President Biden signed the American Rescue Plan Act in March 2021 within weeks of assuming power, he had envisaged a longer run for the expanded version of the Child Tax Credit stimulus check. He had expected it to at least rn through 2025 and had even hoped to make it a permanent feature. 

Supporters of the 2021 boost to the Child Tax Credit that was part of the $1.9 trillion Rescue Plan, the third round of the COVID-19 relief package, had intended it as an initial run, not a one-off affair. 

The Democrats had hoped that the scheme would prove a resounding success and would cut across party lines in its popularity. They felt that Congress would be compelled to extend its bipartisan support to the scheme. But the Republicans proved to be unrelenting. 

The Child Tax Credit succeeded at reducing child poverty considerably. The poverty rate fell 46% to its lowest level ever in 2021 according to the Census Bureau. The temporary reprieve boosted the lives of nearly 4 million children and their families. It lifted them out of poverty and reduced the number of households that did not have sufficient food. 

The expanded Child Tax Credit delivered more money to 61 million children. The scheme benefitted 36 million households and reached the poorest of families. This was something that did not happen in the earlier rounds as individuals and families with not income to report were denied stimulus checks in the earlier versions of the Child Tax Credit. 

The regular monthly payments allowed parents to afford essentials, groceries, and clothing. It helped people more independent of creditors and helped them pay their rent and utility bills on time.   

But even as the pandemic receded and the restriction eased, the chances of the expanded version of the Child Tax Credit surviving also receded. While the Republicans vehemently opposed the bill for political reasons, Democrat Senator Joe Manchin also refused to back it. He was doing it at the behest of corporate lobbies. His vote was crucial in a senate that was split right down the middle. 

The revival plans collapsed immediately. It drove close to 4 million children back into the clutches of poverty immediately in January 2022 when compared to the month before. 

Repeated Attempts By The Democrats To Revive The Expanded Child Tax Credit Payments Failed

And a year later, all attempts to revive the $100 billion program failed for a second time. It thus effectively erased one of the biggest domestic achievements of President Biden’s then-short tenure. It also prompted supporters of the program to reflect on the reason behind the demise of such an effective and popular policy. 

There were always doubts among a section of Democrat Congressmen that the temporary nature of the Child Tax Credit would in the future undercut its effectiveness. It did not get the time to take root in the way the proponents of the policy would have liked. 

Representative Rosa DeLauro (D-Conn.) had advocated for the expansion of the Child Tax Credit for decades and had fought for its inclusion in the COVID-19 relief package. She was always apprehensive about the temporary nature of the expansion. She said that there was a need for permanence at the outset.

The demise has confounded policy advocates and experts. They have pointed to the tons of evidence that proved that the expansion of the Child Tax Credit helped close gaps in the existing CTC payments of $2,000 a child per year. 

But opponents of the expansion say that the revamped policy was too expensive. They also felt that guaranteed monthly payments would discourage parents from actively seeking work. But research has proved that the expanded Child Tax Credit payments of 2021 did not deter people from joining the workplace. 

The Child Tax Credit has been around since 1997. But it was only in 2021 that families who had no federal income were able to access the payments. The expansion increased the maximum benefit per child from $2,000 to at least $3,600 for children under six and $3,000 for children between the age of 6 and 17.

The first half of the credit came in six equal monthly payments between July and December 2021. The second half came against the income tax return filed in 2022.

Groups that have for so long been historically denied the payments were beneficiaries of the Child Tax Credit as a result of the changes in rules. For instance, Latinos and Blacks, single-parent households, families in rural areas, and large families, were among those who participated for the first time in the scheme. 

For most families who continue to live one incident away from financial ruins, a safety net was vital. It afforded families a bit of breathing space when things go wrong.