Child poverty is a problem that affects many families in the U.S.A. Parents are always concerned about how they will be able to feed their children, take them to the doctor, and afford a decent home. These are basic needs that every child should have a right to access. However, many families face financial difficulties that make it challenging to fulfill these needs. The economic pressure on families, particularly those with low or middle income, can be immense, forcing parents to look for ways out.
Perhaps one of the most effective solutions to this problem is the expansion and enhancement of the Child Tax Credit (CTC). When fully enacted, this policy can provide much-needed financial assistance to families in need and set the foundation for cutting child poverty in half by 2025. Here, we will understand how the Child Tax Credit operates, the difference it has made so far, and why enhancing it is vital to the vision of a future with fewer children living in poverty.
What is the Child Tax Credit?
The Child Tax Credit (CTC) is a tax credit available to families with children in order to decrease their tax liability. It offers supplementary income to the families to help them meet their basic needs including child care, education, food, and shelter. The credit is fully refundable, which means that even families with zero federal tax liability can get a refund for the CTC.
According to the latest rules, the parents can now receive a credit of $2,000 per child. This was raised to $3,600 for children under six years and $3,000 for those between six to seventeen years during the COVID-19 pandemic under the American Rescue Plan. This expansion was groundbreaking as it offered more direct support to families at the time when they required it most.
How the Child Tax Credit is Reducing Poverty
After the CTC was temporarily expanded during the COVID-19 pandemic, child poverty rates have been declining noticeably. Several studies have shown that the enhanced CTC was able to lift millions of children out of poverty in 2021 alone. It helped the families by giving them cash transfers that were used to pay for basic needs such as rent, food, and education materials. This not only relieved the financial burden but also brought other positive consequences, such as improved diet, healthier lifestyles, and more opportunities for education.
Why Expanding the Child Tax Credit is Crucial by 2025
While the CTC has been effective in cutting child poverty rates, the temporary improvements to the credit were ended in 2022 and many families are still feeling the pinch. If no further action is taken, child poverty rates are projected to increase. According to the experts, if the CTC and such other policies are not made permanent, 15 million children in the United States will fall into economic distress by the fiscal year 2025.
With this increase more families will be able to receive this important financial assistance, especially the ones in need. Currently, many low-income families can only get partial benefits or no benefits at all, that’s why they cannot fully benefit from the program. If the credit is fully refundable and the benefit amounts are raised, we could expect the quality of life for millions of children to rise significantly.
The sustainable impacts of eradicating child poverty in the long run cannot be overemphasized. Children raised in poverty are at a higher risk of poor academic performance, poor health, and poor job prospects in the future. Childhood is the best time to start investing in their future, and the CTC is one way to do just that.
The Road Ahead
The CTC is not just a tax policy—it is a safety net for families who want to give their children a better life. By ensuring that the CTC remains a part of the solution, we can work towards the future when every child will have a chance to succeed without being limited by poverty.
