PHILADELPHIA (KYW Newsradio) — As many as 35 million families will start getting checks today as part of the boosted child tax credit. President Joe Biden is scheduled to deliver a speech on Thursday to mark the occasion, inviting beneficiaries to join him as he seeks to raise awareness of the payments and push for their continuation.
"The president felt it was important to elevate this issue, to make sure people understand this is a benefit that will help them as we still work to recover from the pandemic and the economic downturn," White House press secretary Jen Psaki said Wednesday.
Biden has held out the new monthly payments, which will average $423 per family, as the key to halving child poverty rates. But he is also setting up a broader philosophical battle about the role of government and the responsibilities of parents.
Democrats see this as a landmark program along the same lines as Social Security, saying it will lead to better outcomes in adulthood that will help economic growth. But many Republicans warn that the payments will discourage parents from working and ultimately feed into long-term poverty.
"Expanding the child tax credit has the potential to lift millions of families out of poverty and to cut the child poverty rate nearly in half in this country," said Graham O'Neill, of the Philadelphia nonprofit Campaign for Working Families.
KYW Newsradio's Ian Bush spoke to O'Neill on Thursday's broadcast about hot the tax credit works, and how it can help families. Listen to that interview at the top of the page.
Loree Jones, CEO of Philadelphia anti-hunger nonprofit Philabundance, agrees that the effect for families will be significant. She says the expanded child tax credit could be a game changer for fighting food insecurity, which continues to be a serious problem as families emerge from the coronavirus pandemic.
"I believe the test will really be how long the support is offered," she said. "I think if we find some way that we're providing significant sustained support to families with kids that we can absolutely have a longer lasting impact."
Jones says more in this edition of the KYW Newsradio original podcast In Depth:
The Biden administration expanded the tax credit for one year as part of the $1.9 trillion coronavirus relief package that passed in March. Previously, only people who earned enough money to owe income taxes could qualify for the credit. Some 15 million households will now receive the full credit.
Families with dependents, earning up to $112,500 as a single parent or $150,000 if two parents filed jointly, are eligible. The credit is worth up to $3,600 a year for each child age 5 and under and up to $3,000 a year for children between the ages of 6 and 17.
On the 15th of every month, for the rest of the year, parents who filed a 2019 or 2020 tax return in which they claimed the child tax credit, will get half of the credit, up to $300 a month, via direct deposit or a paper check, depending on how they got their tax refund last year.
To get the other half, as a tax credit, parents will have to file a 2020 tax return, claiming those dependents.
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The payments are set to lapse after a year, but Biden is pushing to extend them through at least 2025. The president ultimately would like to make the payments permanent — and that makes this first round of payments a test as to whether the government can improve the lives of families.
Florida Republican Sen. Marco Rubio, who successfully championed increasing the credit in 2017, said that the Democrats' plans will turn the benefits into an "anti-work welfare check" because almost every family can now qualify for the payment regardless of whether the parents have a job.
"Not only does Biden's plan abandon incentives for marriage and requirements for work, but it will also destroy the child-support enforcement system as we know it by sending cash payments to single parents without ensuring child-support orders are established," Rubio said in a statement Wednesday.
An administration official disputed those claims. Treasury Department estimates indicate that 97% of recipients of the tax credit have wages or self-employment income, while the other 3% are grandparents or have health issues. The official, who requested anonymity to discuss internal analyses, noted that the credit starts to phase out at $150,000 for joint filers, so there is no disincentive for the poor to work because a job would just give them more income.
Colorado Democratic Sen. Michael Bennet said the problem is one of inequality. He said that economic growth has benefited the top 10% of earners in recent decades, while families are struggling with the rising costs of housing, child care and health care. He said his voters back in Colorado are concerned that their children will be poorer than previous generations and that requires the expansion of the child tax credit.
"It's the most progressive change to America's tax code ever," Bennet told reporters.
Parenthood is an expensive undertaking. The Agriculture Department estimated in 2017, the last year it published such a report, that a typical family spends $233,610 to raise a child from birth to the age of 17. But wealthier children get far more invested in their education and upbringing, while poorer children face a constant disadvantage. Families in the top third of incomes spend about $10,000 more annually per child than families in the lower third.
The child tax credit was created in 1997 to be a source of relief, yet it also became a driver of economic and racial inequality as only parents who owed the federal government taxes could qualify for its full payment. Academic research in 2020 found that about three-quarters of white and Asian children were eligible for the full credit, but only about half of Black and Hispanic children qualified.