Child Tax Credit Will Be a Key Point of Contestation Before the New Congress

Child Tax Credit Will Be a Key Point of Contestation Before the New Congress

Whether the US government will continue the expanded child tax credit program in 2023 is a key area of argument leading up to the new congress formation.

Government investment in children nearly doubled in 2021 as eligible citizens were handed monthly cheques for child care along with pandemic relief funds. More people were brought under the Child Tax Credit program including people with extremely low and no income. This substantially reduced child poverty. One in every four children and four in every ten Black and Latino children have stopped getting a full amount in CTC since the expansion ended. 3% of the children – those that belong to the lowest income families – get no amount at all.

A bipartisan government such as the one in power in the USA currently, invariably results in the slow movement of policies. As expected, the debate over child tax credit is on. 

The child tax credit is a tax benefit offered to most American families with kids. Every family that had children under 16 and filed for tax returns received $2000 per child as part of the return. The CTC could be decreased or removed for families with very high incomes. In 2021, under the American Rescue Plan, the CTC was modified so that every family regardless of whether it earns enough to pay taxes, received the CTC. Moreover, half of the amount was paid in monthly installments, and the other half, when they filed the returns the following year. On top of this, the CTC amount was increased from $2000 per child to $3000 per child for children above the age of 6 and from $2000 to $3600 for children under the age of 6. The age limit for receiving the CTC was also increased to 17 from 16. This policy was effective for 2021 only.

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The expanded CTC helped a lot of people and resulted in a significant drop in child poverty. Naturally, the Democrats want this expansion to be reinstated and continued. Republicans, are not very keen on extending the benefits to low-income parents, as they feel it might demotivate them from working harder. “The left loves to focus on the poverty reduction element of the C.T.C., and it is important and nobody wants kids to be in poverty,” said Patrick T. Brown, a fellow at the Ethics and Public Policy Center. The question he raises is whether it is better to pull children out of poverty by handing out cash or encouraging their parents to get stable jobs.

Currently, the child tax credit amounts to $2000 per child and the full credit is received by families that earn between $23000 and $29000 per year. The parents have to earn at least $2500 per year to claim any amount at all. Married couples who earn more than $400,000 per year and single parents who earn more than $200,000 per year receive a reduced amount. The CTC amount is scheduled to drop to $1000 in 2025 when Trump’s tax cuts expire.