A pandemic tax policy cut poverty to a record low. It expired.
The Child Tax Credit for the year 2021 expanded from $2,000 per eligible child age 6 to 17 to $3,600 per child under age 6 and $3,000 for children age 6 through 17. The American Rescue Plan also included 17-year-olds for the first time.
The Census Bureau’s 2021 poverty statistics show the child tax credit expansion nearly halved child poverty. (In North Carolina, 20 percent of children live in poverty.)
Half the credit came in advance monthly payments even to those with low or no earnings. (Under the previous law, they’d received partial or no credit.) Remember that families with low or no income are ineligible for the tax benefits higher income families receive. Nineteen million children receive less than full credit, or no credit, because family incomes are too low. This includes 45 percent of Black children and up to 39 percent of Latino children because of ongoing disparities in income due to structural and historical racism.
Extended eligibility for 17-year-olds, the increased benefits, and the advance payments reached 61 million children in more than 36 million households, according to the Center on Poverty and Social Policy at Columbia University. Families got the second half of their credit, a lump-sum payment worth the remaining six months’ value, at tax time in 2022.
We can’t afford not to address child poverty. The costs of children growing up poor are associated with low incomes, poor health outcomes, and mental health disorders later in life. And incarceration. Consider the long-term costs of children growing up in crowded, noisy conditions, with inadequate food and nutrition, but enough worry and stress to change brain structure.
Cornell University researcher Gary Evans has followed children who grew up at or below the poverty line for the past 20 years. He and his colleagues found differences in brain structure between participants in their twenties who grew up poor and those who grew up in middle-class households.
Cut childhood poverty. Save a child’s adult life. Early investments in the household security and education of children pay dividends that benefit all of us.
This temporary credit expansion cut poverty. The Columbia University study states: “The weight of the evidence is clear: while in place, the expanded Child Tax Credit reached the vast majority of families with low, moderate, and middle incomes; shored up family finances amidst the continuing COVID-19 and economic crisis; helped reduce child poverty to the lowest level on record; decreased food insufficiency; increased families’ ability to meet their basic needs; and had no discernable negative effects on parental employment.”
But the credit expired and was not renewed in 2022. Gains have been lost. Households once again face food shortages. Financial distress is mounting. Factor inflation into the mix, and poor families are hurting. Again.
January 2022 statistics showed 3.7 million more children in poverty than in December 2021. Except for a slight dip around tax time, monthly child poverty rates stayed higher in 2022.
Elected leaders could have renewed the child care tax expansion. They opted not to. Last ditch Congressional efforts in December 2022 failed to extend the expansion.
Let’s get it right. Low-income children will wind up in the bottom fifth of incomes as adults. Childhood poverty influences everything from health care to voter turnout to how we shape our society.
There’s a simplistic misconception that poverty causes crime. That relationship is complicated. It is clear, though, that policy changes have criminalized offenses associated with poverty: homelessness, mental illness, and drug and alcohol problems.
One more avoidable human cost if we invest in poor children.
Betty Joyce Nash reported for the Greensboro News & Record and the Hendersonville Times-News before moving to Virginia where she worked as an economics writer for the Federal Reserve Bank of Richmond. She co-edited Lock & Load: Armed Fiction, an anthology of literary short stories that probe Americans' complicated relationship to firearms. (University of New Mexico Press, 2017.)