OPINION | The Child Tax Credit Has One Last Chance for Expansion in 2022

by Zelda Foxall

Chardonnay Beaver's recent article for the South Seattle Emerald, "The Call for a National Moral Revival — Part 1: The Poor People's Campaign Then and Now" reminds us that more than 50 years ago, Dr. Martin Luther King led the Poor People's Campaign to put the focus on poverty. The aim was to bring together all races through this common struggle of being poor in America. And yet, here we are today, still fighting poverty.

Tax policies have continued to drive inequality over the years by benefiting the wealthy while failing to reduce hardship and helping the lowest-income families.

However, in 2021, we did make some real progress in the fight against child poverty when Congress passed the American Rescue Plan which included a larger or expanded Child Tax Credit (CTC). The CTC helps with the costs of raising children. Taxpayers can claim a break on their taxes each year based on the number of children in their households and their household earnings.

The 2021 CTC expansion was historic because it made the biggest impact on the reduction of child poverty in a generation. A key feature of the expanded CTC was that it was made fully refundable so that it could help the families who needed it the most. Full refundability means that children in families with no or low incomes will get the full value of the CTC, not a partial value. Prior to the CTC expansion, 27 million children in this country were left out of this benefit, and this included approximately half of Black and Latino children, who received only a partial credit or no credit at all. But thankfully, this inequity was reversed by the American Rescue Plan.

According to the Census Household Pulse survey data, the impact of these monthly CTC payments, which started in July of 2021, was immediate. These payments helped Black and Latino families, who had been dealing with food shortages and other hardships at twice the rate of white families. These payments helped parents buy food, pay utility bills, buy clothing, and pay for educational needs.

But the bad news is that all the gains brought on by the expanded CTC for families, including Black and Latino families, disappeared as soon as the monthly payments stopped. Sadly, in January 2022, when the payments stopped, 3.7 million children were plunged back into poverty. And it gets worse, because throughout 2022 the number of children plunged back into poverty will grow from 3.7 to 4.1 million. This means that poverty for Black children will rise from 13% to 22%. And Latino children's poverty rate will rise from 12% to 21%. Poverty will also increase among white children, but will remain almost two-thirds lower than that of Black and Latino children. This needs to change.

Congress needs to reinstate the expanded monthly and fully refundable CTC and restore eligibility to immigrant children. In 2021 we saw a more than 40% reduction in child poverty! We need to continue this trend because in addition to reducing child poverty, the CTC will help families manage their dwindling budgets in the wake of increasing costs. The average American household, according to Moody's Analytics, is spending an extra $327 per month due to inflation, but lower- and middle-income families are being hit even harder. A single monthly CTC payment of $300 per child under six would bring welcome relief to these struggling families.

Advocates for the CTC are working to bring back the expanded CTC with full refundability and the monthly payment option. The House passed a one-year CTC extension late last year, but 51 senators have so far refused to follow suit. When rising costs from inflation have put an even greater strain on family budgets, the fact that one senator — only one more vote is needed — can stand in the way of relief for millions of Americans is more than frustrating.

But we have one last chance to get this expansion through Congress this year. Congress is likely to pass a tax bill after the election, giving some tax breaks to wealthy corporations. Giving tax breaks to the wealthy generally has bipartisan support. If Congress is willing to help wealthy corporations, they should also be willing to help the lowest-income families by resuming the expanded CTC with full refundability and monthly payments. If we apply enough pressure, we may just get the help that low-income parents so desperately need. So one way to impact Dr. King's legacy of the Poor People's Campaign is to write a letter to your elected members of Congress telling them to expand the Child Tax Credit now. There are 140 million poor or low-income people in this country who desperately need the help.

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