Expanding the Federal Child Tax Credit Could Mean a Lifeline for Millions of Families in Poverty
Though some one in five children in the U.S. are growing up in families too poor to cover all their basic needs, the myriad barriers to financial stability that these families face have gotten little attention this campaign season. But in the tumult of presidential election news, poor families with children were finally at the center of policy discourse recently as Democratic candidate Hillary Clinton unveiled a tax policy proposal that could have dramatic implications for working poor parents.
The announcement of a new tax proposal might only garner the attention of those policy experts and advocates paying close attention to America’s progress in the fight against poverty. That would be a shame for two reasons: (1) her plan could, if enacted, mean a serious financial boost for millions of working families living near or below the poverty line; and (2) with the emerging bipartisan appetite in Washington and beyond for reducing child poverty, the proposal could signal a real opportunity at cutting child poverty in the next administration.
What, exactly, is in Clinton’s proposal? The plan doubles the current federal Child Tax Credit from $1,000 to $2,000 for households with children age four and under. According to the campaign website, that provision alone would reach some 15 million children. The proposal also expands the tax credit refundability guidelines so that more parents at the lowest income levels can access at least part of it as a refund — even if the credit exceeds the parent’s income. In addition, the plan lowers the income threshold for eligible filers. Right now, the tax code only allows parents to access the Child Tax Credit once they’ve earned at least $3,000. The Clinton plan would allow the tax credit to kick in with the first dollar of a family’s earnings, so every working family can benefit.
Clinton isn’t the first candidate to propose a tax benefit for working families. In September, Republican presidential candidate Donald Trump unveiled a plan that would allow working parents to deduct child care expenses for up to four children from their tax bill. But the difference is that Trump’s proposal stands to benefit families under a very specific set of circumstances. Those who don’t itemize deductions, for example, may not get the full benefit. And since the credit is a tax deduction rather than a refundable credit, according to the campaign website, the plan would only apply to families with income tax burdens, meaning it wouldn’t help the most low-income families.
By contrast, refundable child tax credits have long been a critical economic tool for decreasing the financial burden on poor families, allowing states and the federal government to offset the amount that a struggling family spends on child care and other necessities each year, while encouraging employment. In fact, the Census Bureau recently released data showing that refundable tax credits helped to lift some 5 million children out of poverty last year. But at the national level at least, the child tax credit hasn’t been fully accessible for everyone below the poverty line.
That’s why the prospect of doubling and expanding the federal Child Tax Credit is such huge news among anti-poverty advocates. Not only does expanding the Child Tax Credit make sense from a fairness perspective — since families at the lowest level of earnings are likely most in need of financial support — it also puts one of the government’s strongest tools for income support to work for the largest number of needy families.
And, despite the proposal coming in the midst of a contentious presidential campaign, some are already claiming good odds that Clinton’s child tax proposal might get bipartisan support, given that several Republicans proposed similar ideas during the primaries. That’s certainly a positive sign, but there are others. Just consider the work of the U.S. Child Poverty Action Group, a broad-based coalition of nonpartisan child-focused organizations committed to reducing child poverty. CPAG’s members — including First Focus, The Century Foundation, the National Council of La Raza, Center for Native American Youth, MomsRising, and NCCP — are dedicated to elevating research-backed policies that would cut child poverty in half over the next decade. That goal only becomes possible through genuine partnership and collaboration across political lines in Congress and in the next administration.
No one who works full time should have to live in poverty. Yet, that’s the reality for millions of families across the country as parents toil 40 or more hours each week at jobs that pay far below what it takes to cover their household’s basic needs. Then, during tax season, many of those same families are locked out of one of the most effective tools for financial security — or worse, face a steep tax bill on their poverty-level earnings.
Imposing greater tax burdens on the poor not only hurts families presently struggling to work their way out of poverty, but may also make it harder for children to succeed in later life. Children who grow up poor are more likely to remain poor as adults.
It’s rare to have such wide support among elected leaders for an issue, along with firm data on its benefits. Still, after decades of policy evaluation and advocacy, we know that boosting income supports to poor families is one of the best, most proven strategies for strengthening their economic prospects. And now, America’s low-income families with children have finally made it on the presidential campaign stump. This is a moment that we cannot afford to waste. No matter who wins on November 8, it’s up to all of us to keep the momentum of this conversation going — for the good of this generation and of those to come.
Originally published at nccpblog.tumblr.com.