August 20, 2015

 

By Freddie Allen 

Senior Washington Correspondent 

 

Reforms proposed to the Child Tax Credit by the Center for American Progress could help to reduce poverty in children younger than 3 years old in the Black community by nearly 22 percent.

 

The plans to enhance the credit are laid out in a report by the progressive think tank.

 

According to the report, childhood poverty costs the United States $672 billion every year “due to higher health costs, lower educational outcomes, and increased spending on criminal justice.”

 

In the press release about the report, Melissa Boteach, the vice president of the Poverty to Prosperity Program at CAP and a co-author of the report, said that young parents are often forced juggle student loans, spells of unemployment, and other financial shocks at the exact moment they are facing the new financial responsibilities that come with raising a young child.

 

“We know from an abundance of research that family income strongly affects children’s long-term success, including academic achievement, employment, earnings, and health,” said Boteach. “Our proposal both addresses families’ and children’s immediate needs and promotes families’ long-term strength and economic mobility.”

 

More than a decade has passed since the tax credit was increased to $1,000 and CAP researchers note that credit would be worth $1,340 today if it had kept pace with inflation.

 

If lawmakers allowed the Child Tax Credit to keep pace with inflation it would ensure that the tool is a better investment for low- and moderate-income families with children. These updates to the credit would have a significant impact on Black children who live in poverty at ­higher rates than White children.

 

The report said that eliminating the minimum earnings requirement and making the credit fully refundable would also make the Child Tax Credit more effective.

 

“Given that research has shown that boosting poor children’s family income early in life has long-term effects on education, health, and earnings, this investment also would likely have positive effects on children’s long-term economic mobility,” the report said.

 

The report also compared the costs associated with spending on tax breaks on the wealthy to funding the Child Tax Credit.

 

“In 2015, for example, an estimated $49.7 billion will fund just one of the many tax expenditures for the wealthy—the step-up in basis for capital gains, which protects large sums of wealth from taxation when it is passed down to inheritors,” the report said. “Spending on this single item that benefits primarily adult children of the wealthy exceeds by nearly $3 billion per year all current spending on our nation’s 74 million children through the CTC.”

 

Adopting the new policies proposed by CAP would not only help more than two-and-a-half times as many young children as the current policy, they would also cut overall childhood poverty in the U.S by more 13.2 percent.

 

“The price tag of middle-class American economic security has been rising particularly rapidly for families with children, leaving these families increasingly hard-pressed to meet the costs of childrearing,” the report said. “The Child Tax Credit offers a powerful tool for making much-needed investments in the country’s next generation.”

 

The report continued: “By making the credit fully refundable and eliminating the minimum earnings requirement, lawmakers can ensure that the CTC reaches all low- and moderate-income children. By indexing the credit to inflation, policymakers can ensure that it keeps pace with the rising cost of raising a child.

Category: Business



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