House Version of Build Back Better Makes the Child Tax Credit Fully Refundable. The Magnitude of this Change Is Breathtaking.

In our outrageously unequal and increasingly secular society—when Black Friday crowds filled the stores, scrambled to take advantage of online sales, and grieved shortages of the latest iPhones, the U.S. House of Representatives passed a Build Back Better Bill on November 19 that feels almost like a response to a biblical call for justice for America’s children.

During the four-week season of Advent, which began yesterday, Christians will anticipate the birth of the Christ Child in a humble stable.  Worshipers will consider the words of Mary:  “My soul magnifies the Lord… for God has looked with favor on the lowliness of the Almighty’s servant…  God has scattered the proud in the thoughts of their hearts. God has brought down the powerful from their thrones, and lifted up the lowly; God has filled the hungry with good things….'” (Luke: 1:46-55)

The House version of the omnibus economic reform legislation demanded by President Biden has now been sent to the U.S. Senate for deliberation and possible passage—perhaps by Christmas.  Here is how Sharron Parrott, the president of the Center on Budget and Policy Priorities describes the significance of what the House accomplished on November 19: “Today’s vote brings us a critical step closer to delivering policy advances that help families meet everyday challenges such as paying rent and putting food on the table, affording child care and preschool, securing health coverage, and paying for college… The Build Back Better bill would reduce poverty substantially, particularly among children, narrow our nation’s glaring racial disparities, which are the result of our long history of racism and discrimination; and move us toward an economy that works for everyone.”

The House Build Back Better legislation expands the economic reach of the Child Tax Credit. To explain the significance of this single provision, the Center on Budget and Policy Priorities published a separate 19 page report which explains not only the economic but also the profound moral implications of this reform if the Senate follows through by sustaining the actions of the U.S. House:

“The House Build back Better legislation would ensure that families continue to get a significantly expanded Child Tax Credit via monthly payments through 2022; and it would permanently make the full credit available to children in families with low or no earnings in a year, locking in substantial expected reductions in child poverty. The expanded credit benefits roughly 9 in 10 children across the country….  Making the full Child Tax Credit available for families with low or no earnings in a year, often called making it ‘fully refundable,’ is expected to generate historic reductions in child poverty… Before the Rescue Plan made the full Child Tax Credit fully available in 2021, 27 million children in families with low or no income in a year received less than the full credit or no credit at all. Full refundability ensures that children in these families get the same amount of the Child Tax Credit as children in families with higher incomes. This provision is the main driver of the credit expansion’s child poverty reductions.” (emphasis in the original)

The Center on Budget and Policy Priorities continues: “Build Back Better’s Child Tax Credit expansions—especially permanent full refundability—also represent a significant step toward racial equity; they would permanently eliminate a fundamental design flaw in the credit that had the direct effect of ensuring that disproportionate numbers of Black and Latino children received a partial credit or none at all. Before the Rescue Plan’s expansion, roughly half of Black and Latino children in our country received less than the full Child Tax Credit or no credit at all—compared to roughly 1 in 5 white children—because their families earned too little.  Black and Latino families are overrepresented in low-paid work and face worse employment prospects due to historical and ongoing discrimination in education, housing, employment, and criminal justice that have systematically limited opportunity. Build Back Better would also restore eligibility for the credit to children who aren’t eligible for a Social Security number because of their immigration status but can be claimed as tax dependents by using an Individual Tax Identification Number (ITIN).”

The details of the report are profound.  Until last spring’s COVID relief bill, many children had been excluded because “their families’ incomes were too low. That included roughly half of all Black and Latino children and half of children who live in rural communities… This upside-down policy gave less help to the children who needed it most.  The (COVID) Rescue Plan temporarily fixed this policy by making the tax credit fully refundable for 2021.  Build Back Better, in one of its signature achievements, would make this policy advance permanent.”

In the American Rescue relief bill last spring, Congress made three significant changes in the Child Tax Credit: raising the maximum Child Tax Credit from $2,000 to $3,600 per child through age 5, and $3,000 for children age 6-17; allowing families to receive a Child Tax Credit for 17-year-olds; and making the Child Tax Credit fully refundable for the year 2021.  The House version of the Build Back Better Bill extends the first two provisions only through 2022, but the House version permanently makes the Child Tax Credit fully refundable.

CBPP explains the significance for 2022 alone of the changes the House has included in the version it passed on November 19:  “In the absence of the full refundability provision, the first two of those changes would lift an estimated 543,000 children above the poverty line, reducing the child poverty rate by 5 percent… But the two changes plus full refundability stand to raise 4.1 million children above the poverty line and cut the child poverty rate by more than 40 percent.  In other words, the full refundability feature makes the expansion nearly eight times as effective in reducing child poverty.” (emphasis in the original)

What will it mean after 2022 if the U.S. Senate passes the Child Tax Credit reforms now embedded in the House version? “If the maximum credit amount drops back to $2,000 per child in the coming years and the age range of eligibility for the credit returns to under 17, but full refundability remains permanent, roughly 2 million children would be lifted above the poverty line (as compared to child poverty without the full refundability provision in place).  That would reduce child poverty by roughly 20 percent compared to what it would be without the expansion.”

The Center on Budget and Policy Priorities shows how, if adopted by the Senate, Build Back Better will help one family in 2022: “A single mom, with a toddler and a daughter who is a second-grader, works as a home health aide helping an elderly person meet their basic needs; she makes $12,500 working part time around her kids’ schedule. Prior to the Rescue Plan, this family received a Child Tax Credit of $750 per child per year, but they now get $550 per month — a total $3,600 for the toddler and $3,000 for the second-grader in 2021 — and would in 2022 as well if Build Back Better is enacted.” (emphasis in the original)

Making the Child Tax Credit permanently refundable is only one of the urgently needed reforms to ameliorate injustice for America’s children now passed in the House version of Build Back Better—all of which the U.S. Senate needs to adopt.  Here is a summary, from First Focus on Children’s president, Bruce Lesley, of the pro-child investments passed by the U.S. House of Representatives: “This once-in-a-generation legislation will transform the lives of our country’s children and the path of the nation itself. Children have endured decades of deferred maintenance on the care and services they need most. The provisions of this bill — extension and permanent refundability of the child tax credit, universal pre-school, affordable child care, better nutrition, paid family and medical leave, improvement of key children’s health programs — will vastly improve the health and well-being of our children. We implore lawmakers in the Senate to support this measure and bring these benefits to our children and our country.”

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