The federal government’s relief package that President Joe Biden signed last week will temporarily expand the child tax credit.
This credit, currently pegged at up to $2,000 a year per child until they turn 17, will instead total $3,600 for children under 6 and $3,000 for kids up to the age of 18 over the next 12 months. Starting in July, the Internal Revenue Service will distribute half this money to most families with children in monthly payments of either $250 or $300 per child.The IRS will deliver the balance at tax time in 2022.
Here are answers to four important questions about this new temporary benefit.
1. Why are families with children getting these benefits?
This program builds on the existing child tax credit, which reduces the tax burden for families with children as a way of offsetting part of the cost of raising kids. Of all age groups in the U.S., children are the most likely to live in poverty.
Families taking care of children must spend a great deal of money on food, housing, clothing, childcare, school supplies and health care.This spending has greatly increased during the COVID-19 pandemic for many families, amid an unemployment spike.
These benefits are also useful for households with breadwinners who kept their jobs. Food costs have surged, and new needs have arisen for many families as they’ve scrambled to pay for sharply higher childcare tuition, hire private tutors and try to address their kids’ many other new needs created by social distancing.
2. Do other countries provide these payments?
Just as it’s very common around the world to provide benefits for the elderly, the disabled and the unemployed, providing benefits for families with children is the norm. Most wealthy countries, and many countries that aren’t as well-off as the United States, have provided monthly benefits for children for decades.
Whether they’re in Canada, Germany or the United
States, research shows that these payments are an investment in a nation’s future. Other research suggests that child poverty currently costs the U.S. government more than $1 trillion a year.
3. Could this arrangement continue past the 2021 tax year?
Yes. Rep. Richard Neal, a Massachusetts Democrat who chairs the House Ways and Means Committee, is reportedly seeking to make this benefit permanent. Reps. Rosa DeLauro, Suzan DelBene and Ritchie Torres, three other House Democrats, have reintroduced the American Family Act, which would permanently increase the child tax credit and make its payments monthly.
4. What impact will it have on childhood poverty?
Several experts have suggested that this package could halve child poverty, as has been widely reported.
Although one study suggested that expanding the child tax credit could halve child poverty, I don’t think that this expanded — but temporary — child tax credit will make that happen. I do think it will benefit lowincome families a great deal and will lower child poverty rates significantly.
Joya Misra is a sociologist who studies how public policies influence inequality. This article is republished fromThe Conversation under a Creative Commons license.