As Time Winds Down, Fate of CTC Expansion Remains in Jeopardy

By Tiffany E. Browne

As pressure mounts for the Senate to pass the Build Back Better Plan, the Center on Budget and Policy Priorities (CBPP) continues to amplify critical reasons why the agenda must pass swiftly. Should the legislation not fully pass, CBPP is warning that one of the most damaging setbacks is the potential risk of pushing millions of children deeper into poverty. As it stands, under the American Rescue Plan, the increase of the Child Tax Credit (CTC) has provided a significant income boost for working families; to the tune of $3,000 per child for children over the age of six and $3,600 for children under the age of six. Additionally, the age limit was raised to 17, extending the eligibility opportunity for those who wouldn’t traditionally qualify.

According to CBPP, failure to pass the Build Back Better plan would take away the entire CTC for those who would no longer qualify for the credit. If the enhanced credit is allowed to expire, the ripple effects would show as families would struggle to meet their basic needs. Furthermore, not passing Build Back Better would mean investments aimed at reducing child poverty, including funding towards childcare, preschool and free school meal programs, would not be implemented. Even more eye-opening, CBPP points out that if the expansion of the CTC is discontinued, disparities among Black and Latino children could widen with poverty rates increasing by an estimated 9 percent, far less than the estimated 3 to 4 percent increase for Asian and White children.

CBPP also emphasizes how passing the Build Back Better legislation keeps intact the expansion of the Earned Income Tax Credit (EITC), which boosts income for low wage workers not raising children in their home.  As CBPP notes, prior to the expansion, nearly 5.8 million low wage workers were taxed into poverty because their EITC was too low. Full passage of the legislation would place money back into the pockets of working families, thanks to the expanded tax credits, easing financial burdens, particularly for low-wage workers.

As the year comes to a close, more than 36 million families  have received advanced CTC payments since July, with the IRS disbursing final payments on December 15. It is likely the Senate will wait until January to vote on the Build Back Better plan.