“This legislative package likely represents the most effective set of policies for reducing child poverty ever in one bill, especially among Black and Latinx children,” Indivar Dutta-Gupta, co-executive director of the Georgetown Center on Poverty and Inequality, told The Washington Post.
Single parents with incomes up to $112,500 and married families with incomes up to $150,000 will be eligible for the new child tax credit. The expansion of the child and dependent care tax credit means eligible families could also deduct up to 50% of the cost of care, substantially higher than existing levels.
One parent who has been teetering on the brink of disaster that could have been averted entirely had a plan like this been passed earlier talked to The New York Times. Anique Houpe was a letter carrier with a catering business on the side—a single parent starting to get ahead—when the coronavirus pandemic forced her to leave her job to take care of her kids. Then she was denied unemployment benefits and, while recovering from COVID-19, was served with an eviction notice. But, she told the newspaper if she’d had this child tax credit to enable her to hire help with her kids, “I definitely would have kept my job.”
Many, many different families with different income levels will see big boosts. According to the Center on Budget and Policy Priorities:
- A single mother of a toddler, who earns $10,000 a year providing in-home care to older people (with work hours that fluctuate significantly from month to month), now receives a Child Tax Credit of $1,125. Under the House plan, she’d receive $3,600, a gain of $2,475.
- A single mother with a 4-year-old daughter and 8-year-old son, who is out of work for the year due to a health condition, now receives no Child Tax Credit at all, adding to the family’s financial insecurity. Under the House plan, she would receive the full Child Tax Credit of $3,600 for her daughter and $3,000 for her son to help with the children’s expenses.
A married couple in which one spouse earns $20,000 as a short-order cook and the other cares for their 3-year-old son and 7-year-old daughter now receives a credit of $2,625 — well below the $4,000 credit that a higher-income family with two children receive. Under the House plan, they would receive the full Child Tax Credit of $3,600 for their son and $3,000 for their daughter, or a family gain of $3,975.
It’s a major investment in these families and these kids, and one that will have long-term benefits in the health and education of the kids who benefit now.
This is a one-year program as it now stands, but Democrats are hoping that it will be easier to keep in place for the long term than to roll back. It’s hard to imagine Republicans getting on board with that, but … they would be taking a lot of money away from a lot of people.
Low-income people without children will also benefit from an earned income tax credit expansion in the American Rescue Plan, offering them substantial help in addition to the one-time direct payments.