The passage of an expanded Child Tax Credit (CTC) would have been a practical and proven mechanism for lifting millions of children out of poverty. Congress’s failure to restore and expand the CTC at the end of the 2022 legislative session highlights America’s child-rearing class divide and is harmful to children and the families who raise them. The expansion’s fall is murky, but worth exploring as advocates strategize how to best push for policies that equitably distribute public goods and ensure that the needs of every child and family in the United States are met in abundance.
Progressives in Congress and childcare advocates around the country worked to expand the CTC for nearly twenty years before the COVID-19 pandemic started. The American Rescue Plan of 2021 incorporated this work, adding an expansion to the Child Tax Credit that pulled nearly 3.7 million children out of poverty by delivering hundreds of dollars monthly to families across the United States. These regular payments helped families afford gas, food, rent, and school expenses. It reduced child poverty by a third in 2021 and lowered food insecurity among children. There’s extensive evidence on the financially stabilizing effects the CTC had on millions of children around the country, especially in states with high numbers of children experiencing poverty.
But the expanded CTC came with a catch: it would expire after the 2021 tax year. After the deadline passed and the legislation lapsed, Congress struggled to agree on how the credit should look in a post lockdown America. Still, the CTC was generally understood to be a good policy. So, why wouldn’t Congress extend a mechanism that was so consequential for low and middle income families?
First and foremost, supporters of the expansion need 60 senators to gain a filibuster-proof majority. With Democrats (and the Independents who caucus with them) holding 51 Senate seats, this would require 9 Republican votes even if the bill gains the support of Joe Manchin (D-WV), who has long resisted a CTC expansion that is not tied to strict work requirements, for fear it would hurt the labor market. Towards the end of last year, Democrats in Congress attempted to broker a deal with Republicans by leveraging expiring business tax credits to get the CTC expanded. This plan failed and the CTC reverted to its pre-COVID iteration.
With the expansion over, the current CTC now provides no or only partial credit to 18.7 million children under the age of 17 because their parents lack earnings or their earnings are too low. 73% of that number are children of color and well over half live in families headed by a single mother. And yet, children in families with the highest incomes in the country, who make as much as $400,000, receive the full credit. This is an imbalanced picture, one in which families with access to resources and financial stability are prioritized over families who do not. An expanded Child Tax Credit would ensure all children have food on the table, a roof over their heads, and resources for school at the least by ensuring the most vulnerable families receive much needed aid.
The political viability of the expanded CTC is unclear, but not dead. The political makeup of Congress has slightly shifted since its last session. Republicans gained House seats in the 2022 midterms and took control of the lower chamber, while Democrats retained narrow control of the Senate. These results were not enough of a meaningful change to benefit CTC advocates. Supporters and childcare advocates have not given up, and President Biden has called for the full restoration of the CTC in his 2024 budget proposal. Considering both Democratic and Republican leadership have called for action that will give families more financial breathing room, it is disappointing that the expanded CTC fell victim to political posturing.
All children deserve the resources to ensure their basic needs are met to the highest degree. Such a world is within our reach, through policies that promote the equitable distribution of public goods. Policies like the expanded Child Tax Credit, and others like Paid Family Leave and Paid Childcare, enhance the lives of all children and families. These efforts will build a world in which every child and family can enjoy prosperity, safety, and economic empowerment in their everyday lives.
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