Youngster tax credit score begins hitting U.S. households’ financial institution accounts – Morning Journal

WASHINGTON – The child tax break has always been an empty gesture for millions of parents like Tamika Daniel.

That all changed Thursday when the first payment of $ 1,000 hit Daniel’s bank account – and dollars began pouring into the pockets of more than 35 million families across the country. Daniel, a 35-year-old mother of four, didn’t even know the tax credit existed until President Joe Biden extended it for one year under the $ 1.9 trillion coronavirus aid package passed in March.

Previously, only those who earned enough money to pay income taxes could qualify for the loan. Daniel was out of a job for almost a decade because her eldest son is autistic and needed her. So she got by with social security contributions. And she had to live in Fairfield Court, a public housing project that culminates on Interstate 64 as the freeway runs through the Virginia capital, Richmond.

Tamika Daniel poses for a picture in Richmond, Va., Thursday July 15. Daniel, a 35-year-old mother of four, will receive the child tax credit starting Thursday. The extra $ 1,000 a month for the next year could be life changing for Daniel, who now works as a community organizer for a nonprofit in Richmond. It helps to leave a deposit for a new apartment.

But the extra $ 1,000 a month for the next year could be life changing for Daniel, who now works as a community organizer for a nonprofit in Richmond. It helps to leave a deposit for a new apartment.

“It actually comes on time,” she said. “We have big plans. That definitely helps to relieve yourself. “

Biden has cited the new monthly payments averaging $ 423 per family as key to halving the child poverty rate. But he also wages a broader philosophical battle about the role of government and parenting responsibilities.

President Joe Biden and Vice President Kamala Harris wave to children in the crowd during an event marking the start of monthly relief payments for child tax credits in the South Court Auditorium of the White House on Thursday, July 15, in Washington.

Democrats see this as a landmark program in the same vein as Social Security, saying it will produce better adult outcomes that will fuel economic growth. However, many Republicans warn that the payments will deter parents from working and ultimately lead to long-term poverty.

Around 15 million households now receive the full loan. Monthly payments are $ 300 for each child under the age of 5 and $ 250 for children between the ages of 5 and 17. The payments are set to expire after a year, but Biden is pushing to extend them until at least 2025.

The president wants to make the payments permanent, after all – and that makes this first round of payments a test of whether the government can improve the lives of families.

Inviting beneficiaries to the White House to celebrate the first round of payments, Biden said in a speech Thursday that the day had historic resonance as it would give families across the country a boost.

“This would be the largest year-long fall in child poverty in the history of the United States,” said the president. “Millions of children and their families will change their lives for the better from today. And our country would also be better off with it. “

Florida Republican Senator Marco Rubio, who successfully campaigned for a loan increase in 2017, said Democratic plans will turn benefits into an “anti-labor welfare check” as almost every family is now eligible for payment regardless of whether the parents have a job.

“Biden’s plan not only foregoes marriage incentives and work requirements, but also destroys the child support enforcement system as we know it by sending cash payments to single parents without ensuring child support orders are issued,” Rubio said in a statement Wednesday .

The administration denied these claims. Treasury estimates show that 97% of recipients of the tax credit have wages or income from self-employment, while the other 3% are grandparents or have health problems. The loan also starts to expire at $ 150,000 for joint applicants, so the poor have no incentive to work because a job would only bring them more income.

Colorado Democratic Senator Michael Bennet said the problem is one of inequality. He said that economic growth over the past few decades has benefited the top 10% of earners as families grapple with rising costs for housing, childcare and health care. He said his constituents in Colorado are concerned that their children will be poorer than previous generations and that this requires the expansion of the child tax credit.

“It is the most progressive change in US tax law that has ever been made,” Bennet told reporters.

Parenthood is an expensive endeavor. The Department of Agriculture estimated in 2017, the last year it released such a report, that a typical family would spend $ 233,610 to raise a child from birth to 17 years of age. But wealthier children invest much more in their education and upbringing, while poorer children are at a constant disadvantage. Families in the top third of income spend about $ 10,000 more per child annually than families in the bottom third.

The child tax withholding was created in 1997 to be a source of relief, but it has also become a driver of economic and racial inequality, as only parents who owe taxes to the federal government are eligible for full payment. Academic research in 2020 found that about three-quarters of white and Asian children were eligible for full credit, but only about half of black and Hispanic children.

In the census where Daniel lives in Richmond, the median household income is $ 14,725 – nearly five times lower than the national median. Three out of four children live in poverty. For a typical parent with two children in this part of Richmond, the extended tax credit would add nearly 41% to their income.

The tax credit is as much about keeping the middle class as it is about empowering the poor.

Katie Strelka, of Brookfield, Wisconsin, was fired from her job as a beauty and hair care product buyer for Kohl’s department store chain in September as the pandemic made the country more solid. She and her sons, three-year-old Oliver and seven-year-old Robert, were dependent on their husband’s income as pension advisors. The family was already struggling to pay for her husband’s kidney transplant five years earlier and his ongoing therapies before she was released, she said.

With no job prospects, Strelka re-enrolled at the university in February to study social work. Last month she got a new position as Deputy General Manager of the non-profit International Association for Orthodontics. Now she needs day care again. That’s $ 1,000 a month for both children.

All of the tax credit is used for this, said Strelka, 37.

“Every little bit will help now,” she said. “I’m paying for the school out of my own pocket. I’m paying for the boys’ things. The cost of food and everything else has increased. We’re just really grateful. The tide feels like it’s turning. “

Associate press writer Todd Richmond of Madison, Wisconsin, contributed to this report.

This story has been updated to correct that Katie Strelka is paying $ 1,000 per month for day care, not $ 1,000 per week. It was also corrected to correct the spelling of Fairfield Court, not Courts. And it has been corrected to show that the spelling of the Wisconsin mother’s last name is Strelka, not Stekla.

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