Census Report Emphasizes the Demand for an Expanded Federal Child Tax Credit

Abby Ling

On Tuesday, the U.S. Census Bureau released a new report detailing poverty trends from 2022 that makes clear poverty in America is on the rise again. According to the report, the official poverty rate in 2022 was 11.5% and had no statistical difference from 2021. However, the 2022 Supplemental Poverty Measure (SPM) rate – which includes nonmonetary benefits such as tax credits – was 12.4%, a substantial increase from 5.2% in the prior year and the first increase in the overall SPM rate since 2010.

Poverty did see historic declines at the height of the COVID-19 pandemic; unfortunately, it has more than doubled since a year ago. How is this possible? Census officials, policymakers, and economic experts point to changes in federal policy, particularly the expiration of the expanded federal Child Tax Credit (CTC).

In response to the recent data, legislators, policy and economic experts, and tax credit advocates stress that the surge in poverty rates could have been avoided if the expanded CTC was made permanent beyond its 2021 sunset.

President Joe Biden was one of many elected officials who responded to the report by underscoring the need to prioritize the nation’s families over corporate tax breaks: “Today’s Census report shows the dire consequences of congressional Republicans’ refusal to extend the enhanced Child Tax Credit, even as they advance costly corporate tax cuts.”

In 2021, the Biden-Harris Administration enacted the American Rescue Plan Act (ARPA), expanding eligibility for the federal CTC and increasing the tax credit’s value from $2,000 to up to $3,600. This allowed the tax credit to reach millions more low-income families and provide them with the support to meet basic household needs, such as rent and groceries. However, the expanded tax credit expired on December 31, 2021, reducing the CTC to its original $2,000 value and removing extended eligibility.

Policymakers, advocacy groups, and working families fought to re-expand the federal CTC after 2021, but regrettably, Congress has left the tax credit out of legislative decisions for two consecutive years. Without the expanded CTC, poverty rates skyrocketed as inflation also increased the cost of everyday goods, housing, utilities, and the many other necessities that families with children could better afford because of the tax credit.

Congress has another chance to reinstate an expanded federal CTC this year. However, that is contingent on bi-partisan agreement. Congressional Democrats are pushing an expanded CTC as part of broader tax negotiations this fall, while congressional Republicans are promoting a smaller CTC with a work requirement. And, as the end of the year draws closer, it’s imperative to align our priorities with promoting policies that reach and support the needs of the nation’s millions of families and children. This would entail legislation that doesn’t filter out our poorest communities, accounts for inflation, and combats the perpetuated regressive effects of the pandemic. The conditions that accompany expanding the federal CTC do matter, and if we progress policies that do not reach or empower all low-income families, then we risk moving backward.