Child Poverty Rates Plummeted Due To The Enhanced Child Tax Credit — But Now It’s Over
New data shows that the enhanced tax credit helped kids, but now that it’s gone, more families are struggling again.
The amount of children living in poverty in the U.S. dropped 46% in 2021, thanks in large part to the enhanced child tax credit. While this is good news, the bad news is that the expanded coverage of the child tax credit ended last year, and now families who depended on the extra cash for their kids are struggling.
According to new data released by Census Bureau, 5.2% of children lived in poverty in 2021, down 9.7% from 2020. This is the lowest poverty rate on record since the measure providing cash assistance to families started. The refundable tax credit program expanded the tax credit from $2,000 up to $3,600 per child under the age of 6 and $3,000 for children between the ages of 6 and 17.
Parents also had the option to receive the credit in monthly installments. Eligible families received Child Tax Credit payments from July to December 2021, and a host of surveys reflected the success of the program. The Bureau estimates that 5.3 million people were lifted out of poverty because of the enhanced assistance.
Unfortunately, the Biden Administration’s attempt to continue this boosted child tax credit via the Build Back Better Act were squashed in the Senate, thanks in large part to Senator Joe Machin, who cited the tax credit as an inflation catalyst. The consequences have been dire for families who depended on the assistance for necessities.
From December 2021 to January 2022 — the first four weeks sans enhanced child tax credit — the monthly child poverty rate increased from 12.1% to 17%. According to the Center on Poverty & Social Policy at Columbia University, the 4.9 percentage point (41%) increase accounts for 3.7 million more children in poverty, with Latino and Black children experiencing the largest increase in poverty (7.1 percentage points and 5.9 percentage points, respectively).
Further studies show how the lack of enhanced child tax credit has compounded over the months for families struggling to make ends meet.
According to a September 2022 study from the Center for Law and Social Policy (CLASP), 60% of families who previously received the enhanced credit say that it has been harder to keep up with expenses since the payments ended, with 66% percent of parents saying they struggle to afford groceries and 65% saying they are having a hard time paying the bills. Other top expenses families are now struggling with include buying clothing and shoes (49%) and paying rent or mortgage (40%).
Hispanic respondents, parents who have not been married, and respondents with lower incomes were more likely to report difficulties meeting monthly expenses. Half of Hispanic respondents said they were unable to buy quality food, and many additionally reported visiting food banks more frequently since the tax credit’s end, compared to 39% of white respondents and 34% of Black respondents.
In light of the latest from the Census Bureau, Democrats are hoping to restart the program that lifted so many families out of poverty. Senators Michael Bennet (D-Colo), Cory Booker (D-N.J.) and Sherrod Brown (D-Ohio), along with Reps. Rosa DeLauro (D-Conn), Suzan DelBene (D-Wash.) and Ritchie Torres (D-N.Y.), released a joint statement concerning the Bureau’s findings.
“Today’s Census data confirms that the expanded Child Tax Credit worked: it allowed the hard work of tens of millions of parents to pay off and helped them keep up with the cost of living, dramatically reducing child poverty and hunger,” the lawmakers said, according to The Hill.
“We should have never allowed this critical program to lapse, and we should not extend corporate tax breaks at the end of this year without also extending the expanded Child Tax Credit,” their statement concluded. As it stands, it is going to be an uphill battle for lawmakers fighting to extend the tax credit, which means American families who relied on the tax credit will continue to struggle.