The American Rescue Act, which was signed into law in March 2021, expanded the child tax credit for one year. The credit was expanded in three ways:
1. The amount of the child tax credit was increased from $2,000 per child to $3,600 for each child 5 or younger and $3,000 for each child 6-17. (The credit phased out for couples making $150,000 or more and individuals making $75,000 or more.)
2. From July to December 2021, credits were sent to eligible families as a monthly benefit, instead of forcing families to wait for a tax refund.
3. The child tax credit was made fully refundable regardless of income. Previously, millions of families missed out on some or all of the tax credit because they made too little money.
Biden initially proposed extending the expanded child tax credit until 2025 as part of his Build Back Better Agenda. All Republicans opposed this, along with two “conservative” Democrats. In an effort to pass the legislation, Biden proposed extending it one year. All Republicans still opposed it (and two “conservative” Democrats).
What are they “conserving?”
As a result of the decision to let the expanded child tax credit expire in December, 3.7 million children fell into poverty, according to a study by the Center on Poverty and Social Policy. The child poverty rate increased from “12.1 percent in December 2021 to 17 percent in January 2022” — a 41% increase.
The monthly payments, which have now stopped, were spent “on basic household needs and children’s essentials: the most common item is food.” The payments were effective in meaningfully reducing “family food insufficiency, particularly among children in families with low and moderate incomes.” After the July payment alone, “food insufficiency rates among families with children dropped by 24 percent.” After two months of payments, “2 million fewer adults report[ed] that their children, specifically, did not have enough to eat.”
Other top categories for spending the child tax credit payments were bills, clothing, rent, and school expenses. According to a September 2021 survey by the American Enterprise Institute, 62% of families “across all income levels said the Child Tax Credit was ‘somewhat important or very important’ or meeting day-to-day expenses.”
Children living in poverty experience “hunger, illness, insecurity, instability” on a daily basis and are also “more likely to experience low academic achievement, obesity, behavioral problems, and social and emotional development difficulties” over time.
Our answer to “what are they conserving?” Misery, sacrificed economic growth, despair, alienation.
The cost of extending the child tax credit varies depending on exactly how it is implemented but costs around $100 billion per year. There were various proposals to offset the cost of the expanded child tax credit.
One of them was a tax on billionaires (not millionaires, billionaires). The new tax would have only applied to “individuals with at least $1 billion in assets or $100 million annual income in three straight taxable years.” The bill’s sponsor estimated this tax would hit just 700 people. People sitting on stocks they never planned to sell, the gain on which would become entirely tax-free upon their deaths. This tax-free passage of extreme wealth from one generation to the next is what all Republicans (and 2 Democrats) chose to “conserve” as an alternative to keeping 3.2 million children from going hungry.
According to a new report from Americans for Tax Fairness, the 15 richest billionaires are now worth more than $1.5 trillion dollars. The wealth of this group has increased 79% ($668 billion) since the start of the pandemic two years ago.
Tesla CEO Elon Musk, for example, saw his wealth increase from $24.6 billion to $234 billion in the last two years. If the billionaires’ tax had passed, he would have owed about $50 billion, which would reduce his net worth to $184 billion. He would still be the wealthiest person in the world and his contribution would have paid for half of the expansion of the child tax credit for 2022.
We need to elect more Democrats who have their priorities in order.