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Expanding The Monthly Child Tax Credit Could Reduce Child Poverty, Study Finds

Making the expanded Child Tax Credit permanent would lower child poverty by 50% or more in at least 11 states, according to new research from the Urban Institute.

With just a few monthly payments distributed, the expanded Child Tax Credit has already given more than 35 million families a much-needed financial boost. Since payments began to roll out in July, fewer U.S. households with children have reported not having enough to eat. But as eligible parents prepare to receive their third monthly payment, new research has shown that extending the enhanced Child Tax Credit beyond 2021 could help reduce child poverty by more than 40%.

The third round of monthly Child Tax Credit payments rolls out to eligible families this week with those enrolled in direct deposit expected to receive their money on Wednesday while those awaiting paper checks should have theirs within the next week. But although the American Rescue Plan expanded the tax credit program from an annual credit of $2,000 per child to $3,000 per child between the ages of 6 and 17 and $3,600 for children under the age of 6, the expansion isn’t permanent. In fact, this month’s payment marks the halfway mark of the expanded program, which is set to expire on Dec. 31, 2021.

According to researchers, however, extending the expanded program beyond its deadline could have serious benefits for millions of U.S. children. A study released earlier this month by the Urban Institute, for example, found that continuing the expanded Child Tax Credit through 2025 would reduce child poverty by more than 40% in a typical year, resulting in 4.3 million children being lifted out of poverty.

What’s more, making the credit permanent would have even more benefits. According to the Urban Institute, a permanently expanded Child Tax Credit would reduce child poverty by 50% or more in at least 11 states.

Earlier this month, Democratic lawmakers did propose extending the Child Tax Credit through to 2025, although it’s unclear if the proposal will garner enough support from Republicans to pass. In a statement released shortly after Democrats cheered the benefits of the enhanced credit and called for its extension, Republicans on the House Ways and Means Committee derided the cash assistance as “welfare without work.”

“Democrats have turned the Child Tax Credit into Welfare Without Work, which if they make permanent will harm families, risk the loss of billions of taxpayer dollars in waste and fraud, and cost American jobs,” CNBC reported a joint statement from House Ways and Means Republicans said.

Data from the U.S. Census Bureau’s Household Pulse Survey, however, has shown the monthly expanded Child Tax Credit payments have already helped to reduce food insecurity among children. According to researchers from Columbia University, Barnard College, and Bocconi University, data pulled from Census Household Pulse Surveys dated from April 14 to Aug. 2, found the first monthly expanded Child Tax Credit payment, which was issued in July, reduced food insufficiency among low-income households with children by 29%.

What’s more, researchers at the Urban Institute have maintained that extending the benefit would further help millions of children currently living in poverty and likely struggling with food insecurity and financial instability.

“By making these expansions permanent, policymakers can not only lift 4.3 million children out of poverty but also transform the CTC into one of the most effective tools for reducing child poverty in the US,” the Washington, D.C.–based think tank said in its recent report.