Letter - People Power United joins coalition efforts to urge Congress to expand the Child Tax Credit
🗽A well informed citizenry is the best defense against tyranny.
People Power United joined other local, state, and national groups to urge members of Congress to expand the Child Tax Credit. Shout out to Zero to Three for leading these efforts. Here is the letter sent on behalf of our membership:
October 15, 2024
The Honorable Brian Fitzpatrick
The Honorable Nicole Malliotakis Chair, Working Families Tax Team Vice Chair,
Working Families Tax Team Committee on Ways & Means Committee on Ways & Means U.S. House of Representatives U.S. House of Representatives Washington, DC 20515 Washington, DC 20515
Dear Chair Fitzpatrick, Vice Chair Malliotakis, and all Members of the Working Families Tax Team:
Poverty can negatively impact every aspect of our children’s lives, including their healthy development, education, safety, and overall well-being, with potential for life-long and intergenerational negative consequences even if experienced for a short time. Supporting policies that reduce and ultimately end child poverty stands as one of the most important actions lawmakers can take to improve the lives and opportunities for our children, and to help ensure our nation’s bright future. The Child Tax Credit (CTC) is a critical tool to improve the economic security of tens of millions of families with low income and in poverty across the country. The American people – across partisan, racial, gender, regional, and generational lines – agree by overwhelming margins that Congress should extend and improve the Child Tax Credit.1 The below 92 national organizations and 154 state and local organizations encourage the Working Families Tax Team to use the 2025 tax negotiations as an opportunity to meaningfully and permanently improve the CTC by increasing the maximum credit, making it fully refundable, and adopting other enhancements recommended below to ensure those left behind and most in need receive the full credit.
The child poverty rate increased to 13.7% (9.96 million children) in 2023, up from 12.4% (9 million children) in 2022 and more than double compared to 2021 at 5.2% (4 million children).2 The jump from 2021 to 2022 – when the expanded CTC under the American Rescue Plan Act expired – was the highest one-year increase on record.3 This increase from 2021 to 2023 represents more than 6 million children who were allowed to backslide into poverty within two years. Babies and toddlers experience the highest rates of poverty and are the largest group by age threatened by eviction.4
Overwhelming evidence shows that money matters and supports like the CTC are effective in improving children’s near and long-term success. Extensive research underscores that cash assistance for kids and their families struggling to meet basic needs leads to better health outcomes, higher educational attainment, and increased earnings as adults. Research also shows that income support programs reduce household financial stress, improving child-well being and allowing parents to invest in their future and even spend more time with their children.5In addition, there is overwhelming evidence of strong rates of return on investment (ROI) when investments are made in children, particularly children in families with low income.6
Under the current structure of the CTC, there is substantial inequity in which families have access to the full CTC with families in rural America, families of color, and children living with one parent less likely to receive the full benefit of the CTC. 1 in 3 children in rural areas are left out of the full credit because their families’ incomes are too low (compared to around 1 in 4 in metro areas). Similarly, 38% of Black children, 40% of Latino children, and almost a half of all children living with a single mom were ineligible for the full credit due to insufficient income.7
We should support our nation’s children and not punish children or babies for the circumstances or zip code in which they are born. The upcoming negotiations and expiration of the current CTC maximum credit under the Tax Cuts and Jobs Act of 2017 (TCJA) present an opportunity for Congress to prioritize policy choices that make significant headway towards reducing child poverty. We encourage the Working Families Tax Team to include the following policies in a permanently expanded CTC:
▪ Fully refundable: The expansion of the CTC as part of the American Rescue Plan Act of 2021 (ARPA) made the credit fully refundable, eliminating the earnings requirement needed to receive the refundable portion of the credit and enabling previously ineligible families in poverty to receive the full credit for 2021. This provision in particular addressed long standing racial inequalities in child poverty rates by boosting the finances of low-income households, among which Black and Hispanic children are overrepresented.8 Currently, the refundable portion of the CTC is limited to 15 percent of earnings above $2,500 with a maximum credit of $2,000. Such a means test limits the credit for families with the lowest incomes, punishing the children who could most benefit from the full credit. We recommend that the Committee make the CTC fully refundable so as to reach the children and families in greatest need.
▪ Increase maximum credit for children ages 6 through 17: The TCJA temporarily expanded the maximum annual credit from $1,000 to $2,000 per child under 17, which, in conjunction with other adjustments, provided modest tax benefits to families.9 The ARPA further increased the maximum credit to $3,000 per child – including 17 year olds – for 2021, only. These ARPA temporary CTC improvements benefitted low- and middle-income households and the positive outcomes of the increased credit are well-documented: child poverty decreased by nearly half, reaching 62 million children and benefitting an additional 2.1 million children who would have otherwise remained in poverty.10 We recommend the Committee increase the maximum annual credit to at least $3,000 per child ages 6 through 17, designating 17-year olds as “qualifying children,” and maintain the real value of the 2021 expansion as reflected in H.R.3899, the American Family Act.
▪ Expanded credit for children under age 6: Families with children under the age of 6 face myriad financial hurdles – not the least of which includes the sky-high costs associated with child care – at a time when they also are often challenged by increased caregiving responsibilities and lower wages. Furthermore, the ZERO TO THREE State of Babies Yearbook: 2023 found that nearly one in five infants and toddlers live in poverty, making economic insecurity – and the resulting stress – the norm during the period of most rapid brain development across the lifespan.11 In recognition of the valuable role the first six years of life play in shaping future developmental trajectories, we recommend the Committee increase the maximum annual credit to at least $3,600 per child ages birth through 6.
▪ Increased credit for families with newborns: The first year of a child’s life is often associated with a significant increase in costs in combination with a decrease in earnings due to inconsistent access to paid parental leave. Research has found that women can experience a dramatic loss of income during pregnancy, through the peripartum period, and for months and even years afterwards, impacting a family’s long-term economic security.12 Additionally, longitudinal analyses have demonstrated that poverty experienced in the earliest years of children’s lives has a greater impact on developmental trajectories than poverty experienced later in life.13 We recommend the Committee provide an additional payment of at least $2,000 the month in which a child is born, ensure that a family receives the full year’s CTC regardless of the month in which a baby is born, and maintain the real value of this expansion as reflected in H.R.3899, the American Family Act.14
▪ Option for monthly installments: As part of the ARPA CTC expansion, the Internal Revenue Service (IRS) automatically delivered up to half of the anticipated annual credit through monthly payments from July through December 2021 rather than as an annual lump sum. According to a survey conducted by the Urban Institute, 45 percent of nonelderly adults living with children who received the advanced CTC payments reported they preferred receiving the credit as a monthly payment, and respondents with lower incomes were also more likely to prefer the monthly installments.15 Many families have reported that the monthly payments allowed them to purchase basic needs (e.g. food, diapers), cover educational costs (e.g. tutoring, extracurriculars), and make timely housing and utilities payments.16 We recommend that the Committee directs the IRS to provide low- and middle income families with a monthly installment option for the CTC and authorizes a “safe harbor” to protect low- and moderate-income households from being required to remit excess payments that could arise from changes in the number of qualifying children and marital status, and events affecting employment or income.
Make the CTC inclusive of all children: The TCJA temporarily restricted the CTC to children with Social Security Numbers (SSNs) from 2018 through 2025, excluding children with Individual Tax Identification Numbers (ITINs) and Adoption Tax Identification Numbers (ATINs).17 It is estimated that approximately one million children who do not have SSNs, but are eligible for ITINs, are currently unable to access the benefits of the CTC.18 We recommend that the Committee restore access to the CTC for all children, including those with ITINs and AITNs.
▪ Parity for territories: Families residing in U.S. territories have experienced uneven access to the CTC. While the ARPA took steps towards rectifying this discrepancy (e.g. permanently expanded CTC to families with qualifying children in Puerto Rico), further legislative action is needed to ensure that American children are not penalized for the location in which they’re born and raised.19 We recommend the Committee take all steps necessary to ensure the children residing in all U.S. territories can access the full CTC in parity with children residing in states.
▪ Indexed to inflation: The tax code does not currently adjust the CTC maximum credit amount of $2,000 for inflation and, thus, the value of the credit decreases over time. We recommend that the Committee index the maximum credit amount to inflation annually.
An expanded CTC is not a solitary fix to solving child poverty and low income, but rather the north star in a constellation of tax credits and other economic initiatives supporting families. We encourage the Working Families Tax Team to work across the Committee Tax Teams to identify additional avenues to alleviate tax burden for parents and caregivers, e.g. the Child and Dependent Tax Credit and Earned Income Tax Credit. These tax reforms should not impact children and their families’ eligibility for means-tested programs. Additionally, we strongly urge you to prioritize the well-being of all our nation’s children during the broader negotiations to reform the tax code, including through opportunities to raise revenue to invest in the CTC and other critical family support programs such as child care and nutrition assistance.
Child poverty is a policy choice – and Congress has the power to reduce it. An expanded CTC is a proven method to lower child poverty and has widespread support from voters across the political, economic, and geographic spectrums. Addressing economic insecurity not only impacts the lives of children and families now, but also has far-reaching consequences for the long-term wellbeing and prosperity of our nation. We thank you for your consideration and look forward to working with the Working Families Tax Team to support the economic security of all of America’s children and families.
Signed,
National organizations
AFT
Alliance to End Hunger
American Academy of Pediatrics
American Friends Service Committee
American Muslim Health Professionals
Americans for Democratic Action (ADA)
Americans for Tax Fairness
Association of Maternal & Child Health Programs
Autistic Self Advocacy Network
Big Cities Health Coalition
Save the Children
SchoolHouse Connection
Share Our Strength
Small Business Majority
Southern Education Fund
Start Early
The Expectations Project
The Institute for Human Services
TOOTRiS Child Care On-Demand
Trust for America’s Health
UNICEF USA
Voices for Adoption
Voices for Progress
Youth and Women for Change in Eswatini Youth Villages
ZERO TO THREE
20/20 Vision
State and local organizations (by state)
Alabama
Feeding Alabama
Alaska
RESULTS - Alaska
Arizona
RESULTS – Arizona
Seedlings Health
Southwest Human Development
Women’s Health Innovation of Arizona
Arkansas
Arkansas Community Organizations
California
San Diego Community Birth Center
San Diego for Every Child, California
The Children’s Partnership
United Ways of California
Ventures
Colorado
Delaware
Children & Families First DE
District of Columbia
DC Action
Florida
Florida Policy Institute
Temple Glow Wellness
Georgia
Agency for Humanity
GEAARS: Georgia Early Education Alliance for Ready Students RESULTS - Georgia
Southern Women in Motion
Hawaii
Hawaii Children’s Action Network Speaks!
Idaho
Idaho Hunger Relief Task Force
Illinois
Prevent Child Abuse Illinois
Indiana
Indiana Justice Project
Iowa
American Academy of Pediatrics – Iowa Chapter
Common Good Iowa
Louisiana
Louisiana Partnership for Children and Families
Maine
Maine People’s Alliance
Maryland
Cedar Lane Unitarian Universalist Congregation Environmental Justice Ministry RESULTS – DC/MD
Massachusetts
Boston Medical Center
Strategies for Children
The Greater Boston Food Bank
Together for Kids Coalition
Michigan
Michigan League for Public Policy
Mississippi
Mississippi Early Learning Alliance
Missouri
Kids Win Missouri
Water Signs Community Services
Montana
Hearts and Hands Midwifery and Family Healthcare Zero to Five Montana
Nebraska
Nebraska Appleseed
Nevada
Children’s Advocacy Alliance
New Jersey
New Jersey Association for the Education of Young Children
New Mexico
Kelly’s Learning Academy LLC
New York
Center for Independence of the Disabled, New York (CIDNY) Grand Street Settlement
The Children’s Agenda
North Carolina
Black Child Development Institute - Carolinas Little Listeners LLOTC
WZA Consultant
Ohio
Village of Healing
Oklahoma
Pennsylvania
Central Pennsylvania Food Bank
Wayne Presbyterian Church Social Justice Committee
Rhode Island
Adoption Rhode Island
MLPB
South Carolina
RESULTS – South Carolina
South Carolina Program for Infant/Toddler Care Trending Joy, PLLC
Tennessee
Voices for Vermont’s Children
Virginia
Virginia Interfaith Center for Public Policy
Virginia Organizing
Voices for Virginia’s Children
Washington
West Virginia Center on Budget and Policy
1First Focus on Children (2020, Nov). Voters Have Spoken and They Support Children. https://firstfocus.org/wp content/uploads/2020/11/FACT-SHEET-Survey-Shows-Voters-Rank-Kids-As-Top-Priority.pdf
2 Shrider, E.A. (2024, Sep. 10). Poverty in the United States: 2023, U.S. Census Bureau, Current Population Reports, P60-283. https://www.census.gov/library/publications/2024/demo/p60-283.html
3 Shrider, E.A. & Creamer, J. (2023, Sep. 12). Poverty in the United States: 2022, U.S. Census Bureau, Current Population Reports, P60- 280. https://www.census.gov/library/publications/2023/demo/p60-280.html
4 Badger, E., Miller, C.C., &Parlapiano, A. (2023, Oct. 2). The Americans Most Threatened by eviction: Young Children, NY Times. https://www.nytimes.com/2023/10/02/upshot/evictions-children-american-renters.html
5 National Commission on Children (1991), Beyond Rhetoric: A New American Agenda for Children and Families; Greg J. Duncan and Jeannie Brooks-Gunn (1997), Consequences of Growing Up Poor, Russell Sage Foundation; National Academy of Sciences, Engineering, and Medicine (2019), A Roadmap to Reducing Child Poverty, eds. Greg Duncan and Suzanne Le Menestrel; First Focus on Children (2023, Jun.), Child Investment Research Hub; Center on Budget and Policy Priorities (2023, May), Research Reinforces: Providing Cash to Families in Poverty Reduces Risk of Family Involvement in Child Welfare.
6 Hendren, Nathaniel and Ben Sprung-Keyser (2020, Mar.), A Unified Welfare Analysis of Government Policies, The Quarterly Journal of Economics, Vol. 135, No. 3, 1209-1318.
7 Collyer, Sophie, Megan Curran, David Harris, and Christopher Wimer. 2023. Children Left Behind by the Child Tax Credit in 2022. Poverty and Social Policy Brief, Vol. 7, No. 4. Access at www.povertycenter.columbia.edu/publication/2023/children-left-behind-by-the-child tax-credit-in-2022
8The Joint Economic Committee Democrats (2022, Nov. 30). The Expanded Child Tax Credit Dramatically Reduced Child Poverty in 2021. https://www.jec.senate.gov/public/index.cfm/democrats/2022/11/the-expanded-child-tax-credit-dramatically-reduced-child-poverty in-2021
9Tax Policy Center: Urban Institute & Brookings Institution (2024, Jan.) Tax Policy Center Briefing Book: Key Elements of the U.S. Tax System. https://www.taxpolicycenter.org/briefing-book/how-did-tcja-change-taxes-families-children
10 Ibid.
11 Cole, P., Trexberg, K., & Schaffner, M. (2023). State of Babies Yearbook 2023, ZERO TO THREE.
https://zerotothree.wpenginepowered.com/wp-content/uploads/2023/09/SOBY2023_Yearbook_Full_v4.pdf 12 Stanczyk, Alexandra B. (2016, Oct.), The dynamic of household economic circumstances around a birth, Washington Center for Equitable Growth working paper series.
13 Duncan, G. J. & Magnuson, K. (2011). The long reach of early childhood poverty. Stanford Center on Poverty and Inequality. https://inequality.stanford.edu/sites/default/files/PathwaysWinter11_Duncan.pdf
14 Curran, M., Harris, D., & Wimer, C. (2024, Jul.). Equalizing the Child Tax Credit for Babies: How the 2023 American Family Act Treats Infants, Center on Poverty & Social Policy at Columbia University. https://scholars.org/contribution/equalizing-child-tax-credit-babies how-2023
15 Maag, E. & Karpman, M. (2022, Jun.) Many Adults with Lower Income Prefer Monthly Child Tax Credit Payments, Urban Institute and Robert Wood Johnson Foundation.
https://www.taxpolicycenter.org/sites/default/files/publication/164064/many_adults_with_lower_income_prefer_monthly_child_tax_cre dit_payments.pdf
16 Hamilton, L., Roll, S., Despard, M. et al. (2022, Apr.) The impacts of the 2021 expanded child tax credit on family employment, nutrition, and financial well-being: Findings from the Social Policy Institute’s Child Tax Credit Panel (Wave 2), Global Economy and Development at Brookings. https://www.brookings.edu/wp-content/uploads/2022/04/Child-Tax-Credit-Report-Final_Updated.pdf 17 Crandall-Hollick, M.L., Lunder, E.K. (2021, Dec. 16). The Child Tax Credit and Individual Taxpayer Identification Numbers (ITINs), Congressional Research Service. https://crsreports.congress.gov/product/pdf/IN/IN11830#:~:text=In%202017%2C%20P.L.%20115- 97,ID%20requirement%20for%20the%20taxpayer
18 Martinez, V. (2021, May 4). A Permanent Child Tax Credit Must Include Immigrant Families, Center for the Study of Social Policy. https://cssp.org/2021/05/a-permanent-child-tax-credit-must-include-immigrant-families/
19 Corbin, K. (2022, May 11). Take a closer look at how IRS is working to serve residents of Puerto Rico, IRS. https://www.irs.gov/about irs/a-closer-look-expanding-access-in-puerto-rico
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People Power United is a group of community members that champions progressive values and power for the people.