On Thursday, President Joe Biden signed the American Rescue Plan, one day after the House of Representatives passed the $1.9 trillion stimulus by a vote of 220-211. Its supporters, especially those on the Religious Left, assert that the bill’s changes to the child tax credit represent the best way to reduce child poverty. What changes does the American Rescue Plan make to child tax credit? How much money could families expect to get, and when? Is the glowing analysis of its impact true? Or are other policies more effective at limiting – or virtually eradicating – child poverty?
Here are the facts you need to know.
What is the current child tax credit?
The Tax Cuts and Jobs Act of 2017 allows parents with at least $2,500 in e to claim a child tax credit of up to $2,000 for each American child aged 16 or younger. If the CTC would exceed the amount of e tax the parents owe, they could receive up to $1,400 as a refundable child tax credit. This amount is limited to 15% of e and is indexed to inflation.
How does the American Rescue Plan change the child tax credit (CTC)?
The American Rescue Plan expands the child tax credit in its amount, payout, and age and e eligibility. The bill includes a one-year, fully refundable child tax credit amounting to $3,000 for children age 6-17, or $3,600 for children under 6. The ARP increases the CTC by raising the age of eligibility one year, to 17, eliminating the $2,500 minimum e requirement, and allowing parents to receive the full amount even if the refund would be greater than the amount of taxes they owe.
Rather than relieving parents of their tax burden, the American Rescue Plan sets up the child tax credit as a wealth transfer payment.
The Biden administration plans to pay this credit upfront, possibly in monthly increments beginning this summer, rather than in one lump sum when parents file their taxes next year.
How would expanding the child tax credit impact U.S. child poverty?
The ARP’s alteration of the child tax credit would reduce the percentage of American child living poverty from 13.6% to 6.1%, according to an estimate from theCenter on Poverty & Social Policy at Columbia University. If these estimates are right, that’s a potential reduction of nearly 45%.
What have religious groups said about this?
Members of the Religious Left have used this estimated poverty reduction as a justification to support the American Rescue Plan. “Expanding the CTC would do more to reduce hunger and poverty among our nation’s children than any single policy has in decades,” said the anti-hunger nonprofit Bread for the World. “Families receiving up to $3,600 per child would be a lifeline,” said the Network Lobby for Catholic Social Justice of the abortion-funding bill.
Some figures portrayed passing the bill as fulfilling mandments. “As we work our way through these troubled times, we must continue to heed God’s call to care for the ‘least among us,” said Rev. Eugene Cho, president and CEO of Bread for the World.Rev. Jim Wallis, the founder of Sojourners, said the bill would fix “the reversal of biblical values and priorities” that allegedly prevailed heretofore. Sojourners lobbied Congress to pass the ARP in its capacity as a member of the Circle of Protection, whose stated goal is “to form a Circle of Protection around [government]programs that meet the essential needs of hungry and poor people” – indicating that its members entertain only a narrow range of permissible, government-centered solutions to social problems.
Does anything reduce child poverty more than an expanded child tax credit?
If accurate, a 45% reduction in child poverty would represent a significant reduction; however, another mechanism would cut child poverty faster and deeper than this much-celebrated legislation. Having one member of the household who works full time eliminates nearly 100% of all child poverty. The Fraser Institute found in its report “The Causes of Poverty” that only 1.7% of Canadians who live in a home where someone works full time live below the poverty level. Those who live in a home that follows the “Success Sequence” – with people who graduate high school, work full time, and wait until marriage before having children – have less than a 1% poverty rate (0.9%, specifically).
What is the biggest impediment to people finding a full-time job today?
The most easily solved hindrances to full-time work today are government policies stifling job creation, especially oppressive COVID-19 lockdown orders. Despite the fact that science has since shown the coronavirus is deadliest to a narrow subset of the population, lawmakers have opted to cling to their lockdown powers, keeping businesses and schools shuttered.
The effects have been devastating. Up to 60% of businesses that shut their doors during the pandemic will close permanently. These orders have disproportionately harmed munities. Fully one-quarter of all black-owned businesses that closed due to COVID-19 have yet to reopen. They have also destroyed social capital. One of every five churches face permanent closure, according to Barna Group President David Kinnaman.
Lawmakers intended the Paycheck Protection Program to alleviate the pressure caused by artificial, government-mandated business closures. However, PPP funds often went to powerful and well-connected businesses that needed the money least. A mere 1% of businesses received more than a quarter of all PPP loans; 600 businesses each received the maximum loan amount of $10 million.
Worse yet, the American Rescue Plan originally included a measure to raise the minimum wage to $15 an hour. Sen. Kyrsten Sinema, D-Ariz., led seven more of her Democratic colleagues in giving that portion of the bill a curt thumbs down. A $15 minimum wage would disproportionately lock young, minority, and less educated Americans out of the job market, creating an army of welfare recipients dependent on the government for their daily bread.
Why is work important?
Work allows an individual “to provide a dignified livelihood for himself and his family,” according to the Catechism of the Catholic Church. It also stabilizes society by making all members feel invested in its success. “There is no peace without employment,”saidPope Francis on the sixtieth anniversary of the Treaty of Rome.
Are there other benefits to work?
Work expresses the creativity that God embedded within every member of the human race. “In work, the person exercises and fulfills in part the potential inscribed in his nature,” the catechism adds. Work enables each person “toprolong the work of creation by subduing the earth” and “make legitimate use of his talents to contribute to the abundance that will benefit all.”
What’s the bottom line?
All Americans want to reduce child poverty. However, that goal does not justify every means. It does not outweigh the immorality of voting for a bill that subjects hundreds of billions of taxpayer dollars to funding for abortion-on-demand. Nor would it mitigate the cost of the vast majority of the bill, which has nothing to do with COVID-19 and will only burden future generations with pounding debt. For our purposes, the American Rescue Plan could further stymie the greatest child poverty-reducing mechanism known to man: full-time work.
While American families deserve support and relief from the artificial employment crisis triggered by political leaders’ lockdown orders, true fulfillment will e from a government check.