An historic day in the fight against poverty

July 15, 2021By Janet Bauer

Today is a momentous day in our nation’s efforts to confront poverty. On this day, families begin receiving monthly payments from a more robust federal Child Tax Credit — a change that promises to reduce economic hardship and improve the life prospects for millions of children.

As with many important changes spurred by crisis, the upgrades to the Child Tax Credit flow directly out of the pandemic. In March, Congress enacted and the new Biden administration signed into law the American Rescue Plan Act, a far-reaching federal stimulus package. One of the most profound changes in the Rescue Plan is improvements to the Child Tax Credit, a tax credit first established in 1997.

For starters, the American Rescue Plan Act raises the amount that a family can receive, from $2,000 per child to $3,000. For families with children under age 6, the amount goes up to $3,600.

The most significant structural change, though, is how it treats families with the fewest resources. The Act eliminates the requirement to have a minimum amount of earnings. Previously to get the credit, you had to have some earnings. Families shut out of the job market and families paid low wages were getting no credit or just a partial credit. Now under the Rescue Plan, families with the lowest earnings will get the same amount per child as other families. The changes to the Child Tax Credit will cut poverty in Oregon by more than 40 percent.

Another crucial change is the timing of the benefits. Until now, families would get the tax credit once a year, after they filed their tax return. While getting a big check would be a welcome event for just about any family, this structure did not necessarily help families on a tight budget cover their monthly expenses — rent, food, transportation, and so on. Now, the upgraded Child Tax Credit arrives in the form of a monthly deposit or check, providing greater stability for families. The monthly credits will continue through the end of this year.

Workers paid low wages supporting industries vital to our daily lives will feel the difference. These include medical assistants, home health aides, child care workers, cashiers, cooks, bus drivers, delivery personnel, agricultural workers, and building cleaners, among many others.

However, the biggest beneficiaries of these tax changes are the children. There is overwhelming evidence that growing up with economic insecurity — without reliable access to such basics as food, shelter, or health care — is damaging to kids. Children who experience poverty have worse outcomes in virtually every way, from physical and mental health to school performance and earnings when they become adults.

Investing in our children through the Child Tax Credit helps them reach their full potential. It promotes a fairer, more equitable state by helping Black, Latino, Indigenous, and other children of color overcome barriers they face due to past and present racism and systemic bias. The improvements to the Child Tax Credit will help rural communities in particular. An estimated 94 percent of children living in rural parts of Oregon will benefit.

While the improvements to the Child Tax Credit are a true cause for celebration, it is important to keep in mind that there remains room for improvement. For one, the amounts provided by the Child Tax Credit, while significant, fall short of making low- and moderate-income families economically secure.

Second, despite the changes, the Child Tax Credit continues to exclude some of the most vulnerable children. The law denies the credit to undocumented children, even though their parents pay taxes and are more likely than not to perform work deemed essential to the nation’s critical infrastructure. This exclusion puts even greater barriers in the paths of these children.

Finally, most of the tax changes in the American Rescue Plan Act, including the improvements to the Child Tax Credit, are temporary. To avoid a filibuster, the Senate used a legislative tool called “reconciliation” that resulted in the changes lasting only one year.

So, as we celebrate this historic day in our nation’s fight against poverty, we should also stay focused on the need to continue to improve the Child Tax Credit and to make the changes permanent. Our nation and our children deserve it.