A better child tax credit during the COVID-19 crisis
The Child Tax Credit—one of the largest federal programs for children—can be made more generous, reach the one-third of children who are currently left out, and be delivered on a monthly basis to support children and families through the immediate crisis period and until the economy recovers.
Families with children need cash during an economic crisis
The economic consequences of the ongoing COVID-19 pandemic are likely to be particularly severe for low-income households. The Supplemental Nutrition Assistance Program (SNAP) and Unemployment Insurance programs are critical because they can provide timely additional income support for families. However, they do not reach the majority of households with children who are in poverty or near-poverty. Moreover, while SNAP benefits help with food budgets, they cannot be used to cover other critical expenses. As schools and other institutions close, providing cash (through a child allowance or fully refundable Child Tax Credit) to families with children is one way to ensure that all low-income families can meet their basic needs.
Children in larger families are losing out on the Child Tax Credit
The Child Tax Credit is the largest federal expenditure on children, but one-third of all children do not reap the full benefit of this credit because they live in families whose earnings are not high enough to qualify. Building on our previous work, this brief examines the variation in Child Tax Credit receipt by family size. The findings show that children in larger families are more likely to be left out of the full credit than children in smaller families because the earnings required to access the full credit increases with the number of children in the family. Removing the earnings requirement embedded in the Child Tax Credit would produce a significant anti-poverty impact for children in all families, making the biggest difference for children in large families.
Across the 50 states, children are left out of the Child Tax Credit
The Child Tax Credit is the largest federal expenditure for children, but a third of children do not reap the full benefit of this credit. The children excluded from the full credit are those in families whose earnings are not high enough to qualify. Building off of previous work, this brief examines the variation in Child Tax Credit receipt by state and congressional district, finding that children in areas where incomes are lower and poverty rates are higher are those most likely to be left out. These results suggest that proposals to extend the the Child Tax Credit to families who are currently losing out could have a substantial impact on child poverty in the United States.
Left behind: The one-third of children in families who earn too little to get the full Child Tax Credit
The current federal Child Tax Credit provides up to $2,000 per child per year to qualifying children, but low-income families lose out because they do not have enough earnings to qualify for the full benefit. This brief documents who is currently “left behind” in terms of realizing the full benefits of the federal Child Tax Credit because of the CTC’s earnings requirement, finding that those left out are disproportionately children of color, those in families with young children, those with single parents, and those who reside in rural areas. Adopting a more equitable, fully-refundable Child Tax Credit that is not tied to earnings would effectively remedy these inequities and meaningfully increase the after-tax incomes of those who are currently left behind.
Progressive tax credit proposals and the potential effects on poverty in New York City
In this brief, we report on the potential anti-poverty impacts of some of the most prominent tax credit proposals arising from the 2020 presidential campaign on New York City.
The case for extending state-level child tax credits to those left out: 50-state analysis
Expanding the Child Tax Credit (CTC) at the state level could lift millions of children out of poverty and help families who benefited little or not at all from the 2017 federal expansion of the CTC, according to a 50-state report released today by the Institute on Taxation and Economic Policy and the Center on Poverty and Social Policy at Columbia University.
