Child Tax Credit proves anti-poverty policy can be both ambitious and effective

Joanna DiStefano

In the fight against childhood poverty, focus can easily shift between aspiring for possibility and settling for probability. It is not always that we see solutions that we know our public institutions are capable of delivering, but rather those thought to be more realistic or achievable. If events of the past year have proven anything, it is that these outcomes need not be mutually exclusive. It is well within the means of government to enact meaningful anti-poverty policies and deploy resources in a timely and coordinated manner for maximized impact. If we need any convincing, the remarkable progress following the expanded Child Tax Credit (CTC) implementation, enacted as part of the American Rescue Plan Act (ARPA) earlier this year, provides a very clear picture of how swiftly and effectively policy can impact those in need.

The changes to the CTC included three key provisions: an increase in the maximum credit amount (from $2,000 per child to $3,600 for a child under age six and $3,000 for a child aged 6-17 for head of household tax filers making less than $112,500 and married tax filers making less than $150,000), the inclusion of 17-year-old children for the first time, and full refundability (so that even if a qualifying family did not have a tax bill at the end of the year, they could still receive the full value of the credit). Disbursement also changed. Families were able to receive advance payments of one-half of the credit on a monthly basis beginning from July to December of this year, rather than as a lump sum next year at tax time. Families can claim the remaining credit amount when they file taxes next year. 

Monthly distribution of expanded CTC payments began in July and reached nearly 60 million children nationwide. According to the Columbia Center on Poverty and Social Change, this kept an estimated 6 million children from poverty in that first month alone. That represents an immediate reduction in child poverty of 40%. CTC payments have since remained a consistent month-to-month influence in percentage point reductions of the national child poverty rate: 4.7 in August, 4.6 in September, and 4.9 in October.

Ninety percent of families with low incomes used these funds to meet basic needs, such as housing, food, clothing, and utilities, in addition to education by October. This reflects an earlier finding in August that the number of adults living with children reporting that their household didn’t have enough to eat fell by 3.3 million, or nearly one-third. The additional income available to families through the expanded CTC increases the security of children and thus the long-term outlook for better health, better educational performance, and higher earnings as adults.  

Impacts here in West Virginia mirror the national scene. Nearly 350,000 of our state’s children can access the expanded CTC credit. Over 90% of low-income West Virginia families report using these funds to meet basic necessities, and food insecurity in households with children in our state dropped from 11.6% in June to 8.4% in July. 

The data gathered following expanded CTC payments this year proves that progress can be ambitious, effective, compassionate, and just. When we embrace the extent of what is proven possible, anything else becomes less and less acceptable. This includes allowing the CTC expansions to expire at the end of the year. Kids are left especially vulnerable now by the inability of Congress to agree on the Build Back Better Act, which includes provisions for the continuation of the CTC for at least one year.  According to the Center on Budget and Policy Priorities, if the Build Back Better Act is not enacted, the Child Tax Credit would revert to its pre-pandemic status, decreasing total credits per child, excluding 17-year-olds, and losing full refundability. This ultimately results in the least help to the children who need it most — approximately 27 million American children would once again get a partial credit or none at all because their families’ incomes are too low. In our state, that’s projected to be 170,000 kids.

This is no time for mere pragmatism and settling only for a temporary period of poverty alleviation.  The CTC payments that go out on December 15 cannot be the last.  Permanent solutions that lead to the elimination of childhood poverty are not only in everyone’s interest, but they are also clearly within our ability.  

Joanna DiStefano is the Program Manager of the Global Engagement Office at WVU Health Sciences and leader of RESULTS WV, a grassroots movement dedicated to seeking nonpartisan solutions for the elimination of global and domestic poverty.