In order to ensure that all families have the opportunity to prosper, we must identify and eliminate the racial inequalities perpetuated by our current tax system and replace current structures with a decidedly anti-racist one. We can begin to tackle these inequalities by rejecting policies like the recently proposed work requirements and means tests by sen. Joe manchinJoe Manchin Angus King: Loss of climate provisions in reconciliation bill weakens Biden hands in Glasgow (DW.Va.). Regulations like these would threaten the future impact of the expanded child tax credit – a very effective measure that has already improved the lives of millions of families and will continue to lift children out of poverty.
The 11th of March President BidenJoe BidenRand Paul calls for dismissal of Fauci for “lack of judgment” signed the American rescue plan which, among other important provisions, made the child tax credit fully refundable for one year. This provision has improved the financial situation of lower-income American households, who would otherwise not have access to this essential credit by offering them a monthly advance payment in addition to a lump sum at tax time. In fact, the refundability of the child tax credit has had a direct positive impact on children of color. Before credit expansion, nearly half of all black and Latin children were excluded from the full benefit because their collective household did not owe enough federal income tax to qualify. In 2021, it was made available to all families.
Expanding access to the child tax credit makes a huge difference to the well-being of families, and years of research and data amply prove it. Tax credits, such as the child tax credit, canimprove life from infancy to retirement. Research also shows that tax credits improve the health of infants, improve school test scores for children, increase college enrollments, and increase earnings in adulthood.Studies show that these benefits can have the same effect greater immediate impact on the lives of children of color, who experience higher poverty rates than white children. The benefit also has an impact on long-term outcomes, as children who receive federal financial benefits work more and earn more as an adult.
With the expansion of the Child Tax Credit, the credit has not only helped more families, but is also believed to have reduce overall child poverty by 45 percent – reduce poverty by 52% for black children, 45% for Latinx children and 61% for indigenous children. Bold changes like this are precisely what we need to create an economy in which everyone can participate and benefit.
Some people opposed to expanding credit or in favor of a means test may ask, “How can a few extra dollars a month make such a difference?” Here’s how: While the benefit does not and cannot replace a job, the expanded Child Tax Credit actually encourages parents and guardians to seek employment and helps working adults keep their jobs. helping them pay for child care, gasoline, car repairs, bus passes and other necessary expenses they need to work. A recent Humanity ahead study found that 94% of child tax credit recipients said they would continue to work as much or more, as the ripple effects of payments.
Despite the promise of the life-changing supports that extended credit will offer families, some lawmakers are proposing to include work demands and means testing in the next reconciliation package. Job requirements and resource tests (determining an individual’s or a family’s eligibility for government assistance depending on whether they can do without this assistance) directly contradict the true intentions of the child tax credit: a policy that aims to prepare children and successful families so that future generations are better placed to achieve financial security.
Not only would these proposed rules create significant administrative burdens, but they would also prevent some of our most vulnerable families from accessing the help they need. America has a long history of adopting racist policies and exclusion by design, and these provisions fall into this category. Subjecting families of color to these draconian rules not only reduces the perceived value of home care and childcare as legitimate work, but it would also reduce labor market participation and remove the benefits that credit does. he expanded child tax has had so far on all of our society, including a reduction of food insecurity and one cut into poverty.
Conclusion: The expansion of the child tax credit is clearly working. As part of the federal budget reconciliation process, the inclusion of the expanded child tax credit without additional charges would mark a vital step towards racial economic equity.
As more and more members of the public begin to recognize systemic racism and demand that our leaders address the structural racism that leads to unfair disparities, and with COVID-19 raging and further destabilize our poorest households, Congress must protect the benefits that help children stay healthy and whole, which means keeping them out of poverty. We must help all families overcome the hardships of the past few years. To do this, we must reject the means tests and the work requirement, and on the contrary say yes to equity.
Joanna Ain is Associate Director of Policy at Prosperity Now. Since 1979, Prosperity Now has worked to empower millions of people, especially people of color and those with limited incomes, to achieve financial security, stability and ultimately prosperity.