Child tax credit cut by $1,600 pushing children into poverty, according to analysts

Amarie M.

Experts report that compared to December 2021, almost 4 million more children live in households pushed below the poverty line than reported for January 2022, due to a reduction in the Child Tax Credit.
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**This article is based on information sourced from news websites, cited within the story**

What is the Child Tax Credit?

In the United States, married couples filing jointly earning $400,000 per year or less and single/head of household filers earning $200,000 and below are eligible to claim the Child Tax Credit (CTC) for qualifying children. The credit per child has been reduced by $1,600 for 2022.

The 2021 CTC was $3,600 per qualifying child. However, the benefit has been reduced to $2,000 per qualifying child for 2022. This has caused hardship for some families (source).

How some families use the money

One mom said that she used her CTC money to buy more nutritious foods and pay for dance classes for her daughter. Another mother stated she spent the money on her daughter's birthday and Christmas gifts and on their first-ever vacation to the beach (source). Now, they will be unable to afford these things with the cut in CTC benefits. These are two examples representing millions of American families who depend on the CTC.

How the CTC affects the child poverty rate

Last year, under Biden’s American Rescue Plan, the CTC was expanded to $3,600. A significant decrease in the child poverty rate was realized, which was its lowest ever dropped by almost half, according to a Census Bureau report. However, the expanded child tax credit expired months later, which thrust millions of American children back into poverty (source).

Democratic vs. Republican CTC recommendations

The CTC expansion was removed from a major spending bill, despite its success, as a result of a kill vote by Democratic senator Joe Manchin. His vote is needed to push legislation through without Republican support (source).

Manchin recommends and insists that CTC recipients need to be working, as the previous bill gave the benefit to recipients who were not working as well as those who did have jobs. On the other hand, some Republican senators have proposed a different version of the CTC. However, what they recommend would exclude the poorest American families (source).

Another issue is whether GOP lawmakers will approve, considering they have previously argued that such programs discourage people from working, with an Ethics and Public Policy Center fellow stating:

The concern from the folks on the right is that it’s actually going to make it harder for those kids to have a pathway out of poverty, because we know that work is important for a healthy environment and in helping kids thrive.

The bottom line

It is important to note that it's not like there is no CTC this year because the benefit is still available. It's just smaller at $2,000 per qualifying child rather than $3,600. It remains to be seen if the credit will be increased again for next year. Eligible families can expect to receive the benefit as a single tax credit at year-end (source).


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