As very high-level negotiations continue over what should be included in a final reconciliation bill one of CWLA prime issues is the CTC. The internal debate is how to reduce the overall cost of the reconciliation bill (even if paid for by tax increases and other revenue). One easy way is to simply drop a program but that pits critical needs against each other: housing vs. tax credits vs child care vs global warming vs health care expansion vs many other choices. A second strategy is to shorten a programs life span to 2 or 3 years assuming a future Congress will extend the program. A third strategy is to provide less in benefits and more in targeting.
The goal for advocates including CWLA is that the current CTC that families have been receiving since July, will become permanent with some improvements. By some calculations it will immediately lift nearly half of this country’s children out of poverty. That is hugely significant. It does this by making the 2020 version of CTC “refundable.” That means a family can receive the credit or refund even if they did not have enough “earned “income to benefit from reduced taxes through a tax credit.
Some senators (Senator Manchin has been mentioned) want to limit or strip out this refundability. It is pitched as having a “work” requirement on families because “earned income” is usually defined as income from wages or salaries. Some critics argue that by providing a family with a $300 credit per child five and younger or $250 per child aged 6 to 17, will discourage a parent(s) from working. Significant research both here and in other countries that provide similar credits undercut that argument. There is not a drop off in work and some economists argue there is an increase as the limited funds allows a parent the resources they need to go to work.
Such a “work” requirement could be called a “parent penalty.”
For a working single parent that $300 is not enough to live on but it could make the difference between being able to pay for an unexpected car repair that is their only source of transportation to their job. It may also help prevent making difficult choices between competing needs such as the utility bill, prescription medication or groceries.
Most important, if more than 4 million children are lifted above the poverty line. What impact will there be on the country over the long term if millions of children do not grow up in poverty in the critical early childhood developmental years?