Make CTC and EITC Expansions Permanent in Forthcoming Reconciliation Legislation
September 7, 2021
Dear Members of Congress:
The Leadership Conference on Civil and Human Rights, a coalition charged by its diverse membership of more than 220 national organizations to promote and protect civil and human rights in the United States, and the undersigned 101 organizations, write to urge you to make permanent, through the reconciliation bill, the temporary expansions of the child tax credit (CTC) and earned income tax credit (EITC) contained in the American Rescue Plan Act (ARPA) and to extend eligibility to include all families, regardless of immigration status.
In an America as good as its ideals, every person should be able to live with dignity and meet their basic needs. Yet too many people in communities across the country are struggling to get by. Even before the COVID-19 pandemic, decades of discrimination and institutional racism in almost every area of life, including education, employment, housing, credit and lending, the criminal-legal system, health care, voting, and immigration have left many communities of color vulnerable to poverty. In 2016, for example, 33 percent of Black workers and 34 percent of Latino workers earned below-poverty wages, compared to just 19 percent of White workers,[1] and despite overall income growth between 2018 and 2019, poverty rates in Black and Latino communities remained higher than in White communities: 18.7 percent and 15.7 percent respectively, versus 7.3 percent.[2] Poverty rates are a staggering 44% in the territory of Puerto Rico. In 2019, more than one-quarter of Black children and more than one-fifth of Hispanic children lived below the poverty level.[3] For communities of color, the pandemic exacerbated the economic hardship that had already existed as result of prior policy choices that created deep inequities. As we emerge from the pandemic, we must do all we can to build better lives for all of us together.
The expansions of the CTC and the EITC contained in the ARPA will provide critically needed temporary relief to millions of families and working people. Already, about 61 million children have benefitted from advanced, monthly CTC payments.[4],[5] Immediately after monthly CTC payments began in July, the number of households with children reporting that they sometimes or often did not have enough to eat dropped three percentage points to the lowest percentage since the pandemic began.[6] Almost half of families receiving the CTC reported spending their payments on food.[7] In addition, the percentage of families with children reporting difficulty paying household expenses also declined — even as the share of households without children experienced slightly more difficulty paying expenses during the same period.[8] These data reinforce the many stories that families have previously shared about spending tax credit payments on housing costs, child care, and transportation.[9]
The improvements made to the CTC and EITC through the ARPA are a long-overdue investment in our families, but these expansions must be made permanent in order to promote long-lasting economic security. They include:
- Making the CTC fully available to poor and low-income families (sometimes referred to as full refundability);
- Expanding CTC eligibility to 17-year-old children;
- Increasing the full amount of the CTC from $2,000 to $3,000 per child ages 6-17 and $3,600 per child under six;
- Making available advanced monthly payments of the CTC;
- Raising the maximum EITC for low-paid working people without children at home from $540 to $1,500 per year, and increasing the income cap from about $16,000 to about $21,000;
- Extending EITC eligibility to younger adults ages 19-24 and older adults over 65; and
- Making CTC expansion to Puerto Rico permanent.
Prior to the ARPA, millions of people — often those most in need of a tax credit or financial relief —were prevented from receiving the CTC and EITC. The CTC, for example, was only partially refundable, a policy choice that prevented more than 27 million children, including roughly half of all Black and Latino children, from receiving the full credit or any credit at all because their family’s household earnings were too low.[10] The rules were particularly cruel for families headed by single mothers. Seventy percent of children in families headed by single mothers or solo female guardians were ineligible for the full credit because they earned too little,[11] yet we know that many women in low-pay jobs also suffer from lack of employer-sponsored benefits like paid leave, health insurance, and other benefits that support the economic security of families in higher-income jobs. At the same time, women — and particularly Native American women and women of color — are paid less than non-Hispanic White men in their jobs,[12] directly harming their ability to provide for their families. In 2019, the overall poverty rate for families with children headed by single mothers was 31 percent, with 43 percent of Native American families, 35 percent of Black families, and 34 percent of Latino families headed by single mothers living in poverty in 2019.[13] Making the CTC fully refundable provides more equitable support to all families, including those who face structural disadvantage.
Similarly, the expansion of EITC to include more low-paid working people and to increase the amount of the credit will provide financial relief to more than 17 million low-income people, including roughly 3.6 million Latino working people, 2.7 million Black working people, and more than 1.5 million working people of Asian American, Alaska Native, and American Indian descent.[14] Prior to the ARPA’s temporary expansion of the EITC, adults without children living in their homes were the only group of people — some 5.8 million adults, disproportionately Black and Latino — who were taxed into, or deeper into, poverty, in part because their tax credit was too small.[15] Taxing working people further into poverty ensures that they will not have the means to escape it, perpetuating intergenerational poverty, especially in communities of color.
By expanding eligibility for CTC and EITC benefits and increasing benefit amounts, Congress has made a much-needed investment in America’s families, but the value of this investment would be lost if it were to remain temporary. We cannot return to a tax system that forces working people into, or deeper into, poverty, and we cannot turn our backs on the millions of families who will be helped out of poverty through the expanded CTC. The investments being made in the CTC through the ARPA are expected to lift 4.1 million children out of poverty, over half of whom are children of color.[16] The ARPA is projected to cut the Black and Latino child poverty rate by more than 40 percent each, and cut poverty among Asian American children by about 30 percent.[17] Reducing poverty helps promote economic stability and opportunity; reduces food and housing insecurity; and is associated with better health outcomes, less stress, and higher educational achievement.[18] While the benefits of a temporary expansion of the CTC and EITC will allow families to pay for groceries, rent, transportation, school supplies, and more, the full benefits of these expansions cannot be realized in one tax cycle. Pulling the plug on these changes would be a callous policy choice to sacrifice the health and well-being of millions of families, many of whom have been suffering the brunt of systemic racism and structural inequities for generations.
As groundbreaking as the changes in the ARPA have the potential to be, Congress must ensure that in any permanent expansion of the CTC and EITC that all families, regardless of immigration status, can be eligible for these credits. The Tax Cuts and Jobs Act of 2017 amended the CTC to exclude children without Social Security numbers. Denying the benefits of the CTC to these children inhibits the credit’s ability to be a far-reaching anti-poverty tool in immigrant communities. Twenty-five percent of first-generation children and 22 percent of second-generation children lived in poverty in 2017, compared to 17 percent of non-immigrant children.[19] Similarly, restrictions on the availability of the EITC deny critical support and tax relief to working families. Currently, working people without a Social Security number are ineligible for the EITC, even if they pay taxes through an Individual Tax Identification Number (ITIN), and married couples will not qualify if one spouse does not hold a Social Security number.[20] For both the CTC and EITC, including ITIN families is critical and should be addressed by Congress.
Congress must also maintain the option to receive advance CTC payments and ensure that the non-filer portal can remain permanent. Monthly CTC payments provide an immediate economic stimulus to families, allowing them to incur less debt and more easily pay for essential items. Importantly, Congress must also protect families who receive advance payments in error from owing large repayments. The non-filer portal should also be made permanent because it simplifies the process of obtaining the CTC, allowing more families who are not required to file tax returns to benefit. It should also be expanded to allow families without a filing requirement to easily claim other refundable tax credits, such as the EITC. Lastly, the federal government should expand its portal to incorporate low-income non-filers from other jurisdictions — such as Puerto Rico — to become eligible for the advance payment.
The devastation that many communities are facing during the pandemic requires us to reimagine what kind of America we want to be. We have an opportunity now to reassess policies that have exacerbated disparities and injustice and to invest in all our families. Congress must now make permanent the expansions of the child tax credit and earned income tax credit and ensure that all immigrant families have the chance to benefit from these investments. Please contact Gaylynn Burroughs, senior policy counsel, at [email protected] with any questions.
Sincerely,
The Leadership Conference on Civil and Human Rights
Alianza Nacional de Campesinas
American Association of University Women (AAUW)
American Federation of State, County and Municipal Employees
American Federation of Teachers
Americans for Democratic Action (ADA)
Arkansas Advocates for Children and Families
Asian Pacific American Labor Alliance, AFL-CIO
Association of Asian Pacific Community Health Organizations (AAPCHO)
Augustus F. Hawkins Foundation
Autistic Self Advocacy Network
California Association of Food Banks
California Immigrant Policy Center
Center for American Progress
Center for Law and Social Policy (CLASP)
Center for LGBTQ Economic Advancement & Research (CLEAR)
Child Welfare League of America
Clearinghouse on Women’s Issues
Coalition of Labor Union Women, AFL-CIO
Coalition on Human Needs
Code for America
Community Change
Community Voices Heard Power
Congregation of Our Lady of Charity of the Good Shepherd, U.S. Provinces
Economic Security Project Action
Equal Rights Advocates
Equality Maine
Espacios Abiertos Puerto Rico
Faith in Public Life
Family Equality
Feminist Majority Foundation
Friends Committee on Legislation of California
Fund for Guaranteed Income
Futures Without Violence
Girls Inc.
Ground Game Los Angeles
Groundwork Action
Heartland Alliance
Impact Fund
Income Movement
John Burton Advocates for Youth
Joint Center for Political and Economic Studies
Justice for Migrant Women
Justice in Aging
LatinoJustice PRLDEF
Level Up California
Long Beach Immigrant Rights Coalition
Maine People’s Alliance
MALDEF
Matthew Shepard Foundation
MAZON: A Jewish Response to Hunger
Methodist Children’s Home Society
MomsRising
My New Red Shoes
NAACP LEGAL DEFENSE AND EDUCATIONAL FUND, INC. (LDF)
National Advocacy Center of the Sisters of the Good Shepherd
National Alliance for Partnerships in Equity (NAPE)
National Association of Social Workers
National Black Justice Coalition
National Center for Children in Poverty, Bank Street Graduate School of Education
National Center for Transgender Equality
National Council of Churches USA
National Council of Jewish Women
National Employment Law Project
National Hispanic Media Coalition
National Organization for Women
National Partnership for Women & Families
National Urban League
National WIC Association
National Women’s Law Center
Network Lobby for Catholic Social Justice
New Jersey Policy Perspective
OCA – Asian Pacific American Advocates
Oxfam America
People’s Action
PFLAG National
Pomona Economic Opportunity Center
POWER (People Organized for Westside Renewal)
Prosperity Now
Public Advocacy for Kids (PAK)
RESULTS
RESULTS DC/MD
San Francisco Office of Financial Empowerment
Sojourners
SPACEs In Action
SPLC Action Fund
Strycker’s Bay Neighborhood Council
The Praxis Project
Time’s Up
Trust for America’s Health
Union for Reform Judaism
United Way Bay Area
United Ways of California
Voices for Progress
Voto Latino
Western Center on Law and Poverty
Women Employed
Worksafe
Young Invincibles
YWCA USA
ZERO TO THREE
[1] Economic Policy Institute, State of Working America Data Library, “Poverty-Level Wages,” 2019 (updated Sept. 2020), available at https://www.epi.org/data/#?subject=povwage.
[2] Valerie Wilson, Economic Policy Institute, “Racial Disparities in Income and Poverty Remain Largely Unchanged Amid Strong Income Growth in 2019,” (Sept. 16, 2020), https://www.epi.org/blog/racial-disparities-in-income-and-poverty-remain-largely-unchanged-amid-strong-income-growth-in-2019/.
[3] Id.
[4] U.S. Department of the Treasury, Press Release, “Treasury and IRS Disburse Second Month of Advance Child Tax Credit Payments,” (Aug. 13, 2021), https://home.treasury.gov/news/press-releases/jy0322/.
[5] Except in Puerto Rico which is not providing advanced payments.
[6] Id.; Daniel J. Perez-Lopez, U.S. Census Bureau, “Economic Hardship Declined in Households With Children as Child Tax Credit Payments Arrived,” (Aug. 11, 2021), https://www.census.gov/library/stories/2021/08/economic-hardship-declined-in-households-with-children-as-child-tax-credit-payments-arrived.html.
[7] Perez-Lopez, supra note 5.
[8] Id.
[9] See e.g., MomsRising Members Share Their Positive Experiences with the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), https://www.momsrising.org/EITCCTC/.
[10] Danilo Trisi, Sarah Lueck, Javier Balmaceda, and Alicia Mazzara, Center on Budget and Policy Priorities, “Recovery Legislation Provides Historic Opportunity to Advance Racial Equity,” (June 2, 2021), https://www.cbpp.org/research/poverty-and-inequality/recovery-legislation-provides-historic-opportunity-to-advance.
[11] Areeba Haider and Galen Hendricks, Center for American Progress, “Now Is the Time To Permanently Expand the Child Tax Credit and Earned Income Tax Credit,” (May 21, 2021), https://www.americanprogress.org/issues/poverty/reports/2021/05/21/499777/now-time-permanently-expand-child-tax-credit-earned-income-tax-credit/.
[12] Overall, women working full-time, year-round in the United States are typically paid about 82 cents for every dollar paid to men. The pay gap is even more acute for women of color. Black women are typically paid only 63 cents for every dollar paid to non-Hispanic white men, while Native American women are paid only 60 cents, Latinas are paid just 55 cents, and women in certain Asian American and Pacific Islander communities are paid as little as 52 cents. AAUW, The Simple Truth About the Gender Pay Gap: 2020 Update, available at https://www.aauw.org/resources/research/simple-truth/; National Partnership for Women & Families, Fact Sheet, Asian American and Pacific Islander Women and the Wage Gap (Mar. 2021), https://www.nationalpartnership.org/our-work/resources/economic-justice/fair-pay/asian-women-and-the-wagegap.pdf.
[13] Amanda Fins, National Women’s Law Center, Fact Sheet: National Snapshot: Poverty among Women & Families, 2020 (Dec. 2020), https://nwlc.org/wp-content/uploads/2020/12/PovertySnapshot2020.pdf.
[14] Trisi et al., supra note 7.
[15] Id.
[16] Id.
[17] Id.
[18] National Academies of Science, Engineering, and Medicine, A Roadmap to Reducing Child Poverty (2019), available at https://www.nap.edu/catalog/25246/a-roadmap-to-reducing-child-poverty.
[19] Child Trends, “Indicators: Immigrant Children,” (Dec. 28, 2018), https://www.childtrends.org/indicators/immigrant-children.
[20] Internal Revenue Service, Publication 596 (2020), Earned Income Credit (EIC), https://www.irs.gov/publications/p596.