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5 Reasons to Make the Expanded Child Tax Credit Permanent
The second round of the advance Child Tax Credit (CTC) payments—up to $300 per child—will go to families on August 13th. These advance payments are one of several improvements to the CTC made by the American Rescue Plan—including increased credit amounts and full refundability—that researchers estimate will cut child poverty by over 40%. Unfortunately, these improvements are set to expire at the end of 2021.
Here are five reasons why the expanded CTC should be made permanent.
1. The expanded CTC will help women of color and their families, many of whom struggled to make ends meet before the pandemic, and who were hit especially hard by the recession.
Women of color were more likely to face food insufficiency, difficulty making rent and mortgage payments, income loss, and unemployment than white men or white women throughout the pandemic, and are lagging behind in recovery. The CTC especially benefits women of color and, if made permanent, would help them build long-term economic security and significantly reduce poverty among children of color.
2. The CTC expansions are popular.
Recent polls have shown that the majority of people support the CTC, extending the CTC expansions, and making the expansions permanent. Polls also show that the more people know about the credit, the more supportive they are. For example, one poll found that 56% of respondents supported the CTC, but this number rose to 63% when they were told that more than 90% of households are eligible to receive the credit.
3. Refundable tax credits, like the expanded CTC, make our tax code more equitable.
The tax code is not fair. Never has that been more obvious than during the pandemic—the country’s billionaires got $1 trillion richer while many women and families struggled to keep food on the table. But even before the pandemic, preferential tax rates and loopholes widened racial and gender wealth and income gaps by allowing the rich and powerful—disproportionately white men—to avoid paying their fair share. In contrast, the CTC benefits the people the tax code has historically left behind, namely women and people of color. Making the expansions to the CTC permanent would promote gender and racial equity and would be a strong first step in making a tax code that works for everyone.
4. Making the CTC expansions permanent would stimulate economic growth and benefit all of us.
Tax credits like the CTC stimulate the economy because families in need tend to spend refunds quickly to cover necessities. This spending will help stabilize the economy and generate additional economic activity. But beyond helping the economy recover in the short term, investing in children and families through a permanently expanded CTC would benefit society greatly over the long term. According to one recent analysis by the Center on Poverty and Social Policy, a permanently expanded CTC would provide almost $800 billion in benefits to society by improving children’s health, education, and future earnings.
5. We can’t take the expanded CTC away from families just as they’re recovering from the recession.
If CTC expansions expire after 2021, families would lose these critical income boosts next year when many will still be paying off bills, trying to replenish their savings, and otherwise digging out from the economic crisis. The loss of the expanded CTC benefits would put 4.1 million children back into poverty, including one in 10 children whose families were too poor to qualify for the credit before the expansions. In contrast, making the expansions permanent would provide families with lasting economic security, potentially reduce child poverty by 50%, and improve children’s health and development.
Right now, policymakers are discussing what priorities to include in upcoming infrastructure packages. Tell your members of Congress how important it is for women and families to make the CTC expansions permanent, along with other refundable tax credits and investments in women and families.
