2022 Little one Tax Credit score: How Enlargement Might Remove Poverty for Tens of millions
Advance child tax credit payments in 2021 reduced child poverty by 40%.
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The end of thein December resulted in a tremendous effect on poverty in the US. Analysis from Columbia University suggests that 3.4 million more children lived in poverty in February 2022 compared with December 2021.
The number of children living in poverty decreased by 40% when the monthly child tax credit payments were sent out from July to December 2021. Thewill come to families in their this year. Then the credit will revert back to its original, nonrefundable amount of $2,000 per child.
President Joe Biden is urging Congress to extend the payments “so no one has to raise a family in poverty.” The White House backed up its argument recently with data showing the state-by-state impact of the child tax credit on American families. The Biden administration claims that the expanded credit would not only help individual families but also support the economy and boost employment.
Another new study from the National Bureau of Economic Research suggests that the benefits of an expanded child tax credit would greatly outweigh its price. It estimates that the expanded program would cost $97 billion and provide social benefits of $982 billion.
Read on to learn about the potential effects of an enhanced child tax credit and how you and your family could be impacted. For more, discover theand learn whether you have to if you received too much.
It could lift millions of children out of poverty
When the child tax credit came to an end in December, roughly 3.7 million more children suffered from poverty, according to a study by Columbia University. The latest research from Columbia shows that the percentage of children living in poverty dropped slightly in February, from 17% to 16.7%. The February percentage still marks a steep increase from December’s measure of 12.1%.
On average, one in seven children lives in poverty, according to Elaine Maag, principal research associate at the Urban Institute. That comes out to roughly 13 million children. If the enhanced child tax credit payments were to be extended — and be fully refundable — it could drop child poverty by 40%, according to Maag.
The extra money could help offset the effects of inflation
in February year over year, just after the monthly child tax credit program ended. For families who were receiving up to $300 per child per month and now getting nothing, the price increases on groceries and gas can be scary.
However, if the child tax credit payments are extended, those families wouldn’t feel as crunched for money and it would help to offset inflation, Maag said. If they’re in a better financial position, they won’t be as affected by the price increases.
If it’s not extended, those families might face food insufficiency and have difficulties paying their rent and utilities.
It could bring an increase in employment
For many families, one parent has to stay home to take care of their children because they can’t afford child care. But with that extra money coming in each month, it could give parents the wiggle room they need to pay for a babysitter or care facility so both can go to work. This could result in a rise in employment throughout the US, Maag said.
On the other hand, some secondary household earners might work less or not at all if there’s additional income to support their family because they wouldn’t need to pay for child care.
What if there’s a work requirement to get the payments?
One of the reasons the enhanced child tax credit payments weren’t extended last year is because there wasn’t a work requirement. Sen. Joe Manchin, a West Virginia Democrat, said he’d prefer parents only be eligible for the credit if they work and file taxes. Because the Senate is evenly divided, his vote is critical to push a renewal of the program forward.
However, a work requirement leaves out many families in need. For instance, those who can’t afford to work due to child care costs are already in a bind but wouldn’t be eligible to receive the credit. So, parents who lose their jobs would also lose the money they’re getting from the credit.
Maag said the child tax credit is more likely to aid parents going back to work if there’s no work requirement since the existence of the credit is not a key factor to not work.
A child tax credit extension could help bring millions of children out of poverty.
How could bring the child care rate down to no more than 7% of income help?
During his remarks to Congress, Biden said cutting the cost of child care could help change the standard of living for working parents. “Middle-class and working folks shouldn’t have to pay more than 7% of their income to care for their young children,” he said.
Bringing the child care rate down to no more than 7%, parents could allocate more of their money to other basic needs instead of child care. Maag said the cost of child care would likely increase but it wouldn’t be as overwhelming.
Right now, many parents can’t go to work because they can’t afford quality child care, and some are relying on neighbors and other family members who aren’t as reliable. Cheaper child care expenses would significantly help parents financially.
Will an extension to the credit cost taxpayers more money?
Yes, it will cost people more money in the short term, Maag said, but income for children is an investment. Here’s why: Children in poverty, on average, tend to have worse health outcomes because they’re not receiving the right level of nutrition. They also have lower education outcomes for the same reason and are less likely to graduate from college. If children grow up under these circumstances, they have a lesser chance of getting a good-paying job in the future.
Therefore, it’s more expensive in the long term to not deliver those payments to families in need, Maag said.
What’s the deal with getting an extension?
In 2021, Congress passed the American Rescue Plan, whichfor most American families, increasing the amount to $3,600 per child under 6 and $3,000 for kids 6 to 17. It also created for the latter half of the year. Those payments ended in December, and there’s no indication yet that the child tax credit will be enhanced for 2022.
Biden’s Build Back Better plan, which would have included an extension to the child tax credit, appears dead. But Biden is pushing for Congress to adopt individual pieces of the economic proposal, which would include extending the enhanced payments.
Some senators have expressed interest in passing a standalone bill without adding a work requirement. However, Manchin would need to be on board to pass an extension of the credit in the Senate.
For more information, here’s. So, to get the rest of your child tax credit money.
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