It would appear that Senator Joe Manchin’s sabotage of the expanded Child Tax Credit as part of Build Back Better has killed the restoration of last year’s extraordinary but temporary improvement of this federal program as part of the American Rescue Plan COVID relief bill. But America’s child poverty advocacy coalition has not yet given up and neither have the experts at the Center on Budget and Policy Priorities. Democratic leaders in Congress—Senators Sherrod Brown, Michael Bennet, Cory Booker, Ron Wyden and Raphael Warnock—and Representatives led by Rosa de Lauro are still in conversation with Republican Senators Mitt Romney, Richard Burr and Steve Daines, who have offered two versions of their own Republican Child Tax Credit proposal.
It is urgently important for America’s public school educators and child advocates to keep on pushing for expanding the Child Tax Credit and making it fully refundable. The educational damage of child poverty cannot be solved through school reform. While teachers can support children whose lives are ravaged by our society’s alarming economic inequality, public schools alone cannot undo the stresses and privations that poverty imposes on America’s poorest children.
Much of the ongoing conversation this month has been about the Family Security Act, proposed by Senator Romney and other Republicans, which would replace the Build Back Better Better version of the Child Tax Credit that was rejected by Senator Joe Manchin. Last week a coalition of national child advocacy organizations, the First Focus Campaign for Children, wrote a letter to Senators Mitt Romney, Steve Daines and Richard Burr to explain why their recent version of the Family Security Act isn’t good enough: this most recent version will leave America’s very poorest children in worse straits than a version Romney proposed in 2021.
Here is the First Focus Campaign for Children: “The good news is that we know what works to reduce child poverty.” A 2019 landmark National Academy of Sciences, Engineering, and Medicine (NASEM) “study finds that a child allowance, operating as an extension of the Child Tax Credit, is the most powerful tool we have to combat child poverty and narrow the racial poverty gap. Extensive research shows when households with children receive cash transfers, they spend it on resources that support their children’s healthy development—improving their physical and behavioral health and educational outcomes and leading them to earn more as adults… The first version (2021) of the original Family Security Act proposed by Senator Romney would have cut child poverty by an estimated 32.6%… Households with the least resources would have been eligible to receive the full (newly increased) Child Tax Credit… Unfortunately, as the Family Security Act morphed into version 2.0, changes focused on adults were made to the Child Tax Credit and significantly reduced the positive impact it would have on millions of children. The ‘best interests of children’ became an afterthought as the focus shifted to some sort of ‘deservedness’ standards for adults that has the effect of punishing children. As a result, the Niskanen Center’s updated analysis shows that the Family Security Act 2.0 would only reduce child poverty by just 12.6%.”
The Center on Budget and Policy Priorities details the primary reason why the latest version of the Family Security Act would punish children in families with the lowest income: “To qualify for the maximum credit for each child in the family, families would need to have earned at least $10,000 in the prior year… Families with earnings below $10,000 would receive a proportional credit. For example, a family earning $5,000 would receive 50 percent of the maximum credit for each child.” Families with no income would no longer qualify, but couples earning up to $400,000 per year would qualify as would single parents making up to $200,000 annually.
But, as the Center on Budget and Policy Priorities further explains: “The $10,000 earnings requirement to receive the full credit would apply to all families, including parents with babies and young children, retired grandparents caring for their grandchildren, and parents with disabilities that may limit their ability to work. It would also newly require caregivers not only to live with the child but also to have legal custody of the child, which is stricter than current law and may disqualify many grandparents or other relatives who care for children from claiming the credit. And it would impose a new restriction for families that include immigrants: under current law, children must have a Social Security number (SSN) to qualify for the Child Tax Credit, but the proposal would impose an additional requirement that a parent also have an SSN, denying the credit to children who are U.S. citizens if their parents lack an SSN.”
The Center on Budget and Policy Priorities explains another serious problem when several of the provisions of the newest version of the Family Security Act, are computed together: “The Romney proposal… (would require) families with low and moderate incomes to pay for more than half the cost of expanding the credit… The Romney plan would dramatically cut the Earned Income Tax Credit (EITC) a credit that provides an income boost for workers with low and moderate incomes, and eliminate the ‘head of household’ tax filing status, which millions of single parents who work at low-paying jobs use when they file their income tax returns… For example, consider a single mother who has a toddler and a daughter in second grade and works as a home health aide, making $25,000 a year. Her family’s Child Tax Credit would grow by $3,640 under the Romney plan, but they would lose $4,105 from the EITC cuts and the elimination of the head of household filing status, for a net income loss of $465. If both children were age 6 or older, the net income loss would be even larger: $1,665.”
The Center on Budget and Policy Priorities summarizes what would be the primary effects of the latest Family Security Act provisions: “Denying the full credit to children based on their parents’ earnings would do virtually nothing to boost parental employment and would withhold help from the children who most need it….
- “In more than 95 percent of families who benefit from making the credit fully refundable, the parent or other caretaker is working, between jobs, ill or disabled, elderly or has a child under age 2.
- “Evidence from both the United States and Canada strongly indicates that giving the full credit to all children, including those whose families don’t have earnings in a year, won’t affect adults’ work participation to any large degree. Most estimates suggest around 99 percent of parents would continue to work under an expanded credit.
- “An earnings requirement hurts children whose parents are least able to meet basic needs, exposing these children to serious hardship.
- “Research links additional income to better outcomes for children in families with low incomes. The added income could significantly improve their long-term health and how well they do in school, make it more likely they will finish high school and attend college, and boost their earnings as adults.”
When Congress did not renew last year’s expansion of the Child Tax Credit, which temporarily made it fully refundable to all families with children, whatever their income, the program reverted to its pre-American Rescue Plan status. The Center on Budget and Policy Priorities emphatically reminds us all of the current Child Tax Credit’s primary injustice: “The major flaw in the current Child Tax Credit has been its denial of some or all of the credit to children in families with little or no income, even though they stand to benefit the most from the extra income. Prior to the Rescue Plan’s temporary expansion of the credit, roughly 27 million children received less than the full credit or no credit at all because their families earned too little. They included roughly half of all Black children, half of Latino children, roughly one-fifth of white children, one-fifth of Asian children, and roughly half of children living in rural areas.”