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Lawmakers look at expanding child tax credits to help low-income families

The U.S. Senate is trying to pass a $1.9 trillion package for COVID and economic-related relief, with one key section providing assistance to families with children by expanding tax credits. Many families could receive a $3,000 credit per child. We hear from parents who say they are looking for help, and Elaine Maag, of the Urban Institute, joins Yamiche Alcindor to discuss.

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  • Judy Woodruff:

    The U.S. Senate is considering a $1.9 trillion package for COVID and economic-related relief. One key section provides assistance to families with children by expanding tax credits. Many families could receive a $3,000 tax credit per child between the ages of 6 and 17 years old. Parents with children younger than 6 could get $3,600 a year, or about $300 a month.

    In a moment, Yamiche Alcindor looks at the details.

    But, first let's hear from parents who say they're looking for help.

  • Kirin Smith:

    My name is Kirin Smith. And I'm in Baltimore, Maryland. I have three kids. They are 8, 6, and 5.

  • Joseph Curry:

    My name is Joseph Curry. I have two kids, ages 6, Carissa (ph), and ages 2, Carsten (ph). We live in West Palm Beach, Florida.

  • Melissa Cunningham:

    My name is Melissa Cunningham. I live in Portland, Maine. And I have one son, Travis. He's 10 years old.

  • Joseph Curry:

    We were getting by a little bit, able to put a couple dollars, not a lot, but a couple. And this devastated us.

  • Kirin Smith:

    I am a single parent, and so I'm the primary caregiver in the home. So, I had to decide actually to leave my job and to consult.

    My household income has been like cut in half. It was already not where I would have wanted it to be.

  • Melissa Cunningham:

    Prior to the pandemic, I would work usually days.

    And my son could go to an after school rec, and then I could go to work. And once the pandemic hit, those supports kind of went away. So, now I have been trying to manage working overnight and having a family member come over once a week and watch him while I'm at work. So that's been very challenging.

  • Joseph Curry:

    The biggest needs now for the family is obviously the rent. The car needs tires. The kids grow out of their clothes. Unemployment, without the extra that you get, we'd be probably homeless.

  • Kirin Smith:

    I have three kids. And finding places that can take all three kids that I can afford is extremely difficult. We looked at the YMCA, and they have great programs in our area, but that program is upwards of $200 per child per week, which is just out of our range.

  • Joseph Curry:

    I get some stuff for the 6-year-old. And she's grateful. Even if it's a dollar coloring book, she lights up like a lightbulb, which is the coolest thing.

    And — but I know she knows. She asked for a soccer ball the other day in the Dollar General, and I couldn't buy it for her.

  • Kirin Smith:

    A $350 check is not going to pay for a lot, but it could very well pay for an electric and water bill. And so — and I think that's what most people are, like, focused on right now. Like, this is not money that's going to go for shopping. This is money that's going to, like, catch you up on bills.

  • Joseph Curry:

    If you don't have family or friends that are well off to help and stuff, you're — I mean, I'm living proof you're done. You're literally just surviving.

    So, that bill with the $300 or whatever they're going to do for the kids, yes, that would help immensely, immensely. It's a good start, is what it is, for families.

  • Kirin Smith:

    Toll on parents, it's like you're — you feel like you're failing at everything. I think that's how you feel. It's like you're not 100 percent at work. You're not 100 percent with the kids. Your house is a mess. Your bills are what — you know, God help you. And it's just like — it's too much.

  • Joseph Curry:

    It's very difficult for me to know that I can't provide for my kids like I should or take them to Disney world or take them on any trip.

    And, because of the pandemic, that's probably not going to happen for a long, long time. And that dwells on me.

  • Melissa Cunningham:

    We need healthy, functioning parents to raise healthy, functioning children. And so we're dealing with an epidemic that's creating a massive amount of stress.

    It's creating financial insecurity. People are having difficulty making ends meet. And those things all have a lasting effect. And so I think we need to start this conversation, so that we can move toward better outcomes for all American families.

  • Yamiche Alcindor:

    The new bill, passed by Democrats in the House last week is aimed at reducing child poverty. Now, the current tax credit to help parents is capped at $2,000 a year. This bill would expand that credit by $1,000 or more.

    It would also distribute the money on a monthly basis. It phases out at higher income limits, and the expansion only lasts for a year. Senator Mitt Romney is proposing his own plan. His idea would make new tax credits permanent and even larger, up to $4,200 a year for children under 6.

    Let's focus on all of this more with Elaine Maag of the Urban Institute. She studies these issues.

    Thanks so much for being here, Elaine.

    Tell us, what is the state of childhood poverty in the United States? And how has the pandemic impacted that?

  • Elaine Maag:

    So, it's not good.

    The Urban Institute estimates, in '21, there are 14 percent of children living in poverty. That's roughly one in — out of every seven children, or 10 million total. This is a change from pre-pandemic, where the poverty rate was about 11 percent. And it's actually been trending down.

    So, the pandemic not only increased poverty, but it reversed that trend.

  • Yamiche Alcindor:

    An increasing in poverty during this critical time.

    What impact do you think President Biden's plan could have on childhood poverty, and especially when we look at Black and brown children, communities of color, who often face disproportionate levels of poverty?

  • Elaine Maag:

    So, the way the child tax credit is structured right now, the very lowest-income families don't get the full benefit. In fact, if you don't work, you get no benefit. And if you earn less than $2,500, you earn no benefit.

    And then you have to earn quite a bit of money. Your tax refund is capped at $1,400 per child, instead of $2,000 per child. The Biden proposal would extend the full value of the credit to families with children, even if they're low-income. And what that means is, we could cut that number of children in poverty in half.

  • Yamiche Alcindor:

    What then do you see as the critical differences between the Biden/Harris plan and the plan put out by Senator Mitt Romney?

  • Elaine Maag:

    So, the critical difference is, one has support and one does not.

    So, in practical terms, we have a child tax credit now; 90 percent of families already receive it. So, the IRS is already in touch with all of these families. SSA, on the other hand which would administer the Romney plan, is not in contact with families with children regularly, so there'd be much higher start-up costs to that sort of plan.

    Long-term, a child allowance makes a lot of sense. But if you're trying to deliver benefits quickly, the IRS has an advantage.

  • Yamiche Alcindor:

    And you just said, long-term, it might make sense. But I wonder if you could talk about the political issues that term — and the process of a long-term tax credit, when we think of the critics of some of these proposals, some of them saying that they want to see a work requirement, with Senator Marco Rubio of Florida being one of the critics.

    What do you make of that?

  • Elaine Maag:

    So, it's not clear to me that a pure child allowance has long-term feasibility.

    But it is true, once you stick something in the tax system, it can be hard to remove it. So, if the Democrats are able to put this fully refundable child tax credit into law now, it does seem likely that benefits would extend in additional years.

  • Yamiche Alcindor:

    And you said that you might not think that it's feasible.

    I wonder, also, as we think about the impact that this could have on, again, Black and brown children and the racial aspects of this, can you talk a little bit more about what the long-term processes are, when we look at the fact that the wealth gap is growing and growing?

  • Elaine Maag:

    Right.

    So, one of the real problems with the way the current tax credit is structured is that it's tied to work. And we know that there's a historical legacy of Black and brown families facing higher unemployment. That's particularly true now in this pandemic.

    So, we absolutely, if we want to reduce that gap, we need to focus on policies that will deliver benefits to all children, not just those children who have families who are working enough hours to get the full benefits.

  • Yamiche Alcindor:

    Thank you so much, critical issues to talk about, Elaine Maag of the Urban Institute.

  • Elaine Maag:

    Thank you.

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