The Child Tax Credit (CTC) had its first advance payments sent out on Thursday, July 15. In the coming days and weeks, around 36 million American families are scheduled to receive their first checks. The payments are $250 per month for children six or older, and $300 per month for those younger than six. While the payments have a price—the IRS is spending $110 billion on the initiative—they are widely popular, and House and Senate Democrats are facing increasing pressure to renew the increased level of benefits for next year and beyond.
This week, supporters of a permanent Child Tax Credit gained a new ally: former Federal Reserve Chair and current Treasury Secretary Janet Yellen, who advocated for the expanded program to be kept in an interview with NPR.
“I think this is something that’s very important to continue,” Yellen said on the morning program, opposite Morning Edition host Noel King.
The increased Child Tax Credit was provided for in the American Rescue Plan Act that President Biden signed into law in March 2021. The ARPA is better remembered for its $1,400 stimulus measure. However, it also included the increase of the Child Tax Credit, and it laid out the mechanism by which the payments would be made in advance.
However, the ARPA only provides for one year of the larger Child Tax Credit. Starting in May 2022, after taxes for 2021 are filed, the CTC will return to its normal level of $2,000 per year, only claimable at the end of the year during tax filing season.
This fact has raised objections from many Democrats, who view the increased CTC as an effective way to combat child poverty. Some estimates have suggested that the increased CTC would disproportionately benefit the poorest and most vulnerable families, and that it could possibly cut the child poverty rate in half.
To pay for the increased CTC, Yellen recommended tax increases on the wealthiest Americans, although she repeated Biden’s “ironclad” pledge that no Americans earning less than $400,000 per year would see a tax increase. She also argued that inflation, which remained high during the opening of the pandemic, would decrease “as the economy gets back to normal,” as Americans returned to work and stimulus and unemployment payments came to an end.
Trevor Filseth is a current and foreign affairs writer for The National Interest.