According to a new report by the Hamilton Project, the Child Tax Credit expansion in the 2021 American Rescue Plan led to a record low 5.2% poverty rate in the US. The report states that, “child poverty fell immediately and substantially” with the CTC expansion. The Center for Budget and Policy Priorities estimated that the expanded CTC benefit also prevented an additional 2.1 million children from falling into poverty that year. Both groups recommend a permanent expansion of the program to prevent a rise in child poverty; however, it’s not clear legislation can pass the divided Congress.
Dramatic Drops in Child Poverty Rates Across the Nation
The Hamilton Project Report details dramatic drops in child poverty across the nation, reaching as high as 51%. The report found that the biggest drops in child poverty tended to be in states with a lack of generous policies that benefit moderate and low-income people.
“There’s other evidence to show these are the states that typically have the weakest safety net protections,” Bradley Hardy, one of the authors of the paper said. “ … I think it amplifies the importance of some federal level programs that can be implemented.”
Why the Child Tax Credit Expansion was so Effective
According to the Ohio Capital Journal, “The credit, which was part of the American Rescue Plan Act, not only boosted the amount of money families received (from $2,000 to $3,600 per child under age 6 and to $3,000 for all others) but also extended the age of qualifying children to 17. It also called for the credit to go to families with little or no income — people who previously did not earn enough money to qualify for a child tax credit.”
These benefits lifted tens of millions of children out of poverty and the Hamilton Report concluded, “Future iterations of CTC expansions will benefit from expanded efforts to promote outreach with the aim of improving take-up and participation in the CTC, hopefully to the benefit of economically vulnerable children, their families, and the states in which they reside.”
How Ohio Compares
Analysis has found that Ohio has historically lagged behind with high child poverty rates. The 2022 State of Poverty in Ohio Report shows that Stark had a 13.2% overall poverty rate last year and Tuscarawas County’s rate of 11.9% was lower. Ohio has an estimated poverty rate of 12.7%. That’s 0.8% higher than the country’s rate of 11.9%.
According to the Hamilton Project’s findings, Ohio was among the group of states with the highest drops in child poverty levels from the CTC expansion. The Ohio Association of Community Action Agencies’ State of Poverty Report focused on four key areas that drive poverty: employment issues, childcare, student loan debt and housing concerns. It says these issues interact and disproportionality affect people in poverty.
Is There Any Hope for a Permanent Child Tax Credit Expansion and Reduction in Child Poverty?
Democrats have long advocated for a permanent expansion of the CTC. It was originally a part of the Build Back Better spending package and then again attempted to include the expansion in the Bipartisan Year-End Omnibus bill, but it was ultimately left out after Republican objections.GOP members warned against permanently restoring the child tax credit to 2021 levels, saying the increase could cost taxpayers roughly $1.4 trillion over the next decade, according to a Joint Committee on Taxation report.
Recent reports indicate that Democratic lawmakers are regrouping and looking to compromise with Republicans who want additional corporate Research and Development (R&D)funding. These negotiations are ongoing and progress is still questionable, however some more optimistic observers think the conditions may be right for compromise.