Why Congress Must Make the Child Tax Credit and Earned Income Tax Credit Expansions Permanent

Economic Justice Resources 07.15,21

By Kelly Campbell

Now more than ever, it is imperative for Congress to pass legislation to make permanent the child tax credit (CTC) and the earned income tax credit (EITC) expansions enacted in March 2021 through the American Rescue Plan. Tax credits can function as vital tools for financial relief to the communities who need it the most. Making these two credit expansions permanent has the ability to lift millions of people above the poverty line, helping families cover the cost of food, rent, transportation, child care, and more.

The American Rescue Plan increased the full amounts of the CTC and the EITC and expanded the pool of possible recipients.

  • The full amount of the CTC, $3,600 for children under 6 and $3,000 for children 6 and up, is now available to nearly all families — from those with no income to those making less than $150,000 a year.
  • The EITC is now available to more working people, including young adults 19- to 24-years-old and working people over 65 who were previously ineligible. Working people without children living in their homes can receive nearly triple the maximum benefit available from the credit.

These changes should not be viewed solely as emergency responses to the COVID-19 pandemic. Rather, they are a necessary investment in families and low-income working people, especially those in communities of color. Systemic racism and decades of structural inequality in almost every area of life — including education, health care, housing, and employment — have resulted in economic disparities that have severely threatened the lives and well-being of far too many people in the United States. We have failed as a nation to invest in the kinds of communities that will help people to live their best lives. Congress must make the expansions of the CTC and the EITC permanent.

Permanently enacting the CTC would help ensure that all families have the resources to sustain safe and healthy lives and would lift 4.1 million children above the poverty line, over half of whom are children of color. Similarly, the current changes to the EITC would allow more than 17 million low-paid working people previously excluded from the benefit — including 2.8 million Black workers, 2.8 million Latino/a workers, and 678,000 Asian American workers — to receive financial assistance through the tax credit.

In other words, these credit expansions have made and will continue to make monumental improvements in millions of lives, including access to broadband, a heated and/or cooled home, car repairs, or even child care during summer months. The two credit expansions becoming permanent would make basic human needs more accessible to families and working people who often face systemic barriers to accessing goods and services that many in America may take for granted.

Here are just a few ways these tax credits can be critical in helping low-income people and families access basic needs:

No matter who we are, where we come from, or what’s in our wallets, most of us believe that our family’s health and well-being come first. This past year has put significant strain on many families, and that strain was felt even more acutely by families who were already struggling to make ends meet. The expansions of the CTC and the EITC will provide an additional lifeline to low-income families, disproportionately families of color, to help ensure that they have the support they need to build better lives. Making these expansions permanent can provide small differences that have immense impacts on these families and low-income working people, whether it’s assistance with children, mortgage bills, or the next month’s rent.

Any inaction from Congress on making the expansions permanent after they expire under the American Rescue Plan could have drastic results. Not making these changes permanent would force these families back into poverty — an unconscionable policy choice that would especially harm communities of color, but would ultimately harm us all. In order for the tax credit expansions to be as effective as possible, it’s critical that eligibility be expanded to include all of us, including immigrant families. The EITC is currently unavailable for families with just one head of household without a Social Security number, and the CTC is unavailable to children without Social Security numbers. Allowing these families and individuals to receive the tax credits are important steps toward investing in our communities and ensuring everyone living without financial security receives the resources and support they deserve.

The first payment of the child tax credit starts entering bank accounts today — July 15, 2021 — and will continue on the 15th day of every month until December (unless the 15th of that month falls on the weekend). To check if you are eligible for these payments, manage direct deposits of payments, and submit tax information as a non-filer, visit this website.

Kelly Campbell is a summer 2021 legal intern at The Leadership Conference on Civil and Human Rights.