Many Americans Want a Permanent Child Tax Credit Expansion

July 12, 2021 Topic: economy Region: Americas Blog Brand: The Buzz Tags: TaxesCreditsEconomyPandemicAmerican Rescue Plan

Many Americans Want a Permanent Child Tax Credit Expansion

President Joe Biden argued in favor of the Child Tax Credit expansion as a measure to combat the pandemic.

In less than a week, millions of families will begin to receive the first advance payments of the Child Tax Credit. The payments, sent out by the IRS, were approved by Congress in the March 2021 American Rescue Plan Act. Prior to the legislation, they were set at $2,000 per year for children of any age; the ARPA increased this to $3,000 for children older than six, and $3,600 for younger children, for all families making less than $150,000 per year and single parents making less than $75,000 per year.

The legislation also provided for part of the tax credit to be sent out in advance, rather than claimed as a tax deduction in April 2022. From July until December, six monthly payments, each amounting to one-twelfth of the total, are being mailed out to roughly thirty-six million eligible American households, together containing roughly nine out of ten children in the United States.

Biden argued in favor of the Child Tax Credit expansion as a measure to combat the pandemic. There is no question that the coronavirus crisis has been particularly hard on families with young children. In the best case, lockdowns and working from home have forced families to remain indoors with their children for long stretches of time. Worse, many poorer parents have had difficulty providing for families during the economic downturn, leading to increases in child poverty that the tax credit is designed to mitigate while the pandemic continues.

On this basis, the expanded Child Tax Credit will continue until April 2022, the tax filing deadline for 2021; half of the payments will be provided in advance, while the other half can be claimed as a deduction on one’s taxes. After the fiscal year ends, the tax credit will revert to its previous level of $2,000 per month.

However, some families have argued against the expiration, petitioning Biden to attempt to extend the tax credit’s larger level or to make it permanent. This has especially been the case in poorer counties where parents have comparatively more to gain from recurring tax credit checks than in wealthier areas.

Biden previously indicated his support for a longer expansion of the program at its current level. In the American Families Plan, his second major coronavirus recovery plan, he proposed that the CTC be extended until 2025. However, following negotiations with Senate Republicans designed to cut the cost of the program, it is unclear if the measure will survive.

Trevor Filseth is a current and foreign affairs writer for the National Interest.

Image: Reuters