Children and Families Are Depending on Lawmakers to Expand the Child Tax Credit

By Safaya Smallwood

The holiday season serves as a stark reminder that children from families with low-incomes feel the effects of poverty harder than most. The Child Tax Credit (CTC) is one of the most effective tools available to policymakers to combat child poverty and improve economic mobility for Black and Latino families. The temporary CTC expansion included in the American Rescue Plan Act (ARPA) benefited millions of families and helped reduce the child poverty rate to a record low of 5.2 percent in 2021 — the largest year-to-year drop on record.

The expansion of the credit from July to December 2021 lifted millions of children from poverty, cut food insecurity by nearly a third, and stimulated local economies. Low-income families spent the expanded credit on basic necessities like food, utilities, rent and mortgage payments, and education. Ninety percent of the country’s children benefited from the expanded tax credit program, which generated nearly $20 billion of economic activity each month. For many families, the expanded credit alleviated the painful effects of inflation, enabling them to meet rising costs. It also supported economic mobility, helping parents get back to work and advance their careers with new professional training.

When the temporary expansion of the CTC expired at the end of 2021, millions of low-income children and families fell back into poverty. The expiration corresponded directly to a spike in child poverty, particularly for Black and Latino children, with the poverty rate for Black children rising from 8.3 percent to 18.3 percent and for Latino children from 8.4 percent to 19.5 percent. Millions more are now at risk of impoverishment, reversing the positive impacts of the program on the child poverty rate. Additionally, the credit is no longer fully available to all low-income children. Roughly 19 million children are now excluded from receiving the full credit because their families’ incomes are too low to qualify under the current structure, which disproportionately affects children of color — including half of all Black children and 1 in 3 Latino kids — as well as the children of veteran or active duty families. Policymakers must expand the credit in a way that will benefit these 19 million children who struggle the most to have their basic needs met.

As someone who grew up in a low-income, multiracial family supported by public benefits, I know from personal lived experience how vital these resources can be for families and the profound impacts that the expansions of such programs can have. For low-income families like mine, the power of increasing accessibility, eligibility, and scope of public benefits programs cannot be understated. I know firsthand that even small allotments or increases in benefits can make the difference between whether or not a child has their basic needs met that month. While living in poverty is not a choice for the millions of low-income children struggling for opportunities to survive each day in this country, allowing child poverty to continue and increase is a policy choice for legislators. The expanded CTC offers an effective, efficient, proven blueprint for policymakers to reduce child poverty and support the economic mobility of our country’s most vulnerable families. Now the onus is on legislators to implement these reforms on a permanent basis.

Permanently expanding the CTC on a monthly, fully refundable basis is the most impactful and immediate route for policymakers to reduce child poverty, improve economic mobility, and help low-income families meet their basic needs. Data show that if restored, an expanded CTC could provide much-needed support to 36 million low-income families, with a significant impact on reducing the poverty gap for families of color. Furthermore, the CTC has no negative employment impacts, helping strained parents work more without decreasing workforce participation. In fact, by increasing economic contribution and family stability, an expanded CTC would have both an immediate and long-term impact on economic security, making it an extremely cost-effective policy to reduce poverty. The credit supports long-term economic mobility, stability, and health and education outcomes for families of color in particular. State and local economies also stand to benefit tremendously from the revival of an expanded CTC, and one study found that the United States could lose out on $97 billion of net benefit if Congress fails to restore the credit.

As policymakers strive to reach a bipartisan tax agreement before the end of the year, I urge them — on behalf of other children of low-income families around the country — to include tax changes that would make the credit more available to the roughly 19 million children who live in families whose incomes are now too low to qualify for the full credit. They must also refrain from moving forward with any legislation that gives tax breaks to corporations without addressing the needs of lower-income children and their families. As the year comes to a close and Congress develops legislation that would give tax breaks to wealthy corporations, I urge policymakers not to ignore the needs of the millions of low-income children whose future is in their hands.

Safaya Smallwood is a fall 2023 undergraduate intern at The Leadership Conference on Civil and Human Rights.