Child Tax Credit in Danger? Planned Payments Could Be Reduced by 4 Years If Budget Battle Divides Democrats

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Drazen Zigic / iStock.com
Drazen Zigic / iStock.com

Enhanced child tax credits could be in for a shorter run than anticipated amid infighting between moderate and progressive Democrats, threatening a program that was a key part of the federal COVID-19 stimulus program as well as an important element of President Joe Biden’s “Build Back Better” agenda.

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Some lawmakers are proposing that the benefit only be extended for one more year instead of the five years originally favored by the Biden administration, CNBC reported. The one-year extension also undercuts plans by some Democrats to make the benefit permanent.

The enhanced CTC was included in the American Rescue Plan as a way to help families weather the COVID-19 pandemic. Among other things, it provided advance monthly payments and hiked the benefit for the 2021 tax year to $3,000 from $2,000, with a $600 bonus for children under 6.

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Supporters of the CTC point to its impact on low-income families. According to the Center on Poverty & Social Policy at Columbia University, the second monthly payment of the expanded CTC lifted 3.5 million children out of poverty in August, and lowered the child poverty rate to 11.5% from 11.9% the previous month. Without the CTC, the Center said, the monthly child poverty rate in August 2021 would have been 16.2%.

Another study, conducted by the Urban Institute, said the Biden administration’s original plan to extend enhanced CTC benefits to 2025 would reduce child poverty more than 40% in a typical year, which means 4.3 million fewer children would be in poverty.

But the program is also very broad and expensive, and many moderate Democrats — led by Sen. Joe Manchin of West Virginia — have called for a more modest version. As CNBC noted, Manchin has proposed limiting the credit to families with income of $60,000 or less and also adding a work requirement.

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Now that a one-year extension is being considered, Democrats could be divided even further. U.S. House Appropriations Chair Rosa DeLauro (D-Conn.) called that extension a “big mistake” and “not good for the country,” Politico reported.

Rather than reduce the benefit, some Dems want to expand it by extending it through 2025 and making the credit bigger and more widely available. Some propose indexing the credit to account for inflation. Other suggestions are to offer it to Americans who care for children who aren’t relatives, and make it available to children of undocumented immigrants.

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One of the lawmakers who supports an expanded benefit is Sen. Sherrod Brown (D-Ohio), who said in a statement that “any extension of the full, expanded CTC is a win.”

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Last updated: October 22, 2021

This article originally appeared on GOBankingRates.com: Child Tax Credit in Danger? Planned Payments Could Be Reduced by 4 Years If Budget Battle Divides Democrats

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