If the highly contentious Build Back Better legislation already had been signed into law, approximately thirty-six million American families would be waiting for their second payment of the year from the enhanced child tax credit (CTC). The enhanced child tax credit is seen by many cash-strapped Americans as an unofficial version of the highly sought-after fourth stimulus check.
However, that bill, which aims to tack on twelve more months of the enhanced credits, continues to be on shaky ground due to steadfast opposition from Sen. Joe Manchin (D-WV), who has contended for weeks that extending the credits would only discourage people from working and that any additional federal spending would only exacerbate current red-hot inflationary pressures.
Testing Manchin’s Claims
A new analysis of Census Pulse Survey data from the Social Policy Institute (SPI) at Washington University in St. Louis appears to counter one of Manchin’s claims. The data show that the tax credits did not drive any sizeable exit from the labor force.
“The research indicates that providing parents with financial support for their children is not leading them to forgo employment income altogether,” said the report, which was published along with Appalachian State University.
“There is no evidence within the Census Household Pulse data—a large, high-quality, nationally representative data source—that CTC payments are leading people to leave the workforce,” the report continued.
In fact, the researchers found that families making $50,000 or less annually actually saw their “self-employment rate increase by 2.9 percentage points following the CTC payments.”
They added that “if this trend continues, it could indicate that the CTC is encouraging low-income households to pursue self-employment to make ends meet.”
Eye on Child Poverty
Meanwhile, other polls and studies have revealed that continuing the expanded credits would be highly beneficial to improving child poverty rates.
According to an analysis released by the Center on Poverty and Social Policy at Columbia University, approximately four million children could fall into poverty. This translates into a child poverty rate of about 17 percent—the highest level seen in more than a year. For comparison, the estimated poverty rate in December 2021 was 12.1 percent.
Furthermore, a survey conducted by ParentsTogether Action showed that due to the ending of the expanded credits, 50 percent of respondents claimed that it will be more difficult for them to meet their family’s basic needs and 36 percent admitted that they will no longer be able to meet their family’s basic needs.
A separate analysis conducted by the Center on Budget and Policy Priorities contended that nearly ten million children could potentially fall back into poverty without an extension of the credits.
Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.