President Joe Biden is asking Congress to extend the Child Tax Credit payments “so no one has to raise a family in poverty.”
As it stands, parents across the country will receive their final payment with their 2021 tax refunds. Then unless Congress acts, the credit will revert back to being a 2,000 deduction claimed in 2023.
But Biden believes that reinstating last year’s direct deposits could help in more ways than one.
At a Glance
- During last week’s State of the Union, President Biden urged congress to reinstate the Child Tax Credit.
- With an extra $300 per eligible child, millions of families may rise out of poverty.
- Experts also believe that the monthly payments could bolster the struggling economy and combat unemployment.
President Biden Believes a Child Tax Credit Extention Will Bring 9 Million Children out of Poverty
Last summer, the government began issuing up to $300 monthly payments per eligible child under the enhanced child tax credit. And then Congress extended those payments through the American Rescue Plan. It is estimated that 90% of U.S. children benefited from the Child Tax Credit. And Biden said that the extra cash helped to pull millions of children out of poverty.
But around 3.7 million children once again fell below the poverty line when the payments stopped in January, according to Cnet.
Urban Institute principal research associate Elaine Maag says that one in seven U.S. children live in poverty, which equates to around 13 million children. However, extended child tax credit payments would reduce that number by 40%, meaning 9 million fewer kids would struggle.
The Monthly Payments Could Help with Rising Inflation
The Child Tax Credit cut off just as inflation was reaching 7.5%. So families who had adjusted to the extra payments felt the sting in multiple ways.
If the program begins again, those parents would have help affording necessities like groceries, gas, rent, mortgage, and diapers. So in turn, the money would offset rising inflation.
The Child Tax Credit May Allow More Parents to Head Back to Work
Many families cannot afford child care costs. So one parent often has to stay home instead of starting or continuing a career. But Biden’s child tax credit may give those parents extra cash to afford daycare or babysitters, which would allow them to head back into the workforce.
As Maag said, that would have an obvious effect on employment numbers.
And on the flip side, the payments could also help some parents stay home if they’d rather not send their kids to daycare. With the extra $300 per child, they may be able to afford to drop their secondary income and support their family more comfortably.