The Financial Fountain of Youth: Investing in Future Generations
August 12, 2023Print
Imagine two teens aspiring to play professional soccer – we’ll call them Marcus and Travis. Marcus doesn’t have access to a nearby field, let alone a large patch of grass to roam around. He wants to play for his high school, but he faces socioeconomic hurdles that make it challenging for him to pursue his passions. Travis, on the other hand, was enrolled in a soccer academy. Stepping foot on turf fields while donning a sponsored kit, Travis plays in front of recruiters regularly with the opportunity to land a scholarship at the college or university of his choice.
These experiential disparities, based on socio-economic status, illustrate the limitations some youth can face if their families remain unaware of resources (like tax credits) that they can leverage to level the playing field between them and their peers.
Stories like these emerge daily—but on International Youth Day, they are especially stark. The day, which serves to spotlight issues affecting youth across the world, is also intended to empower youth in realizing their potential. Above all, this day presents an opportunity for policymakers to address the challenges affecting youth by pushing legislation that would help support their growth and development.
Many issues affecting our youth stem from poverty, and economic security programs can provide an opening for low-income children to succeed. Studies show that poverty harms children’s development. Investing and expanding financial assistance through programs such as the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) can ensure these cash benefits lift and keep millions of children above the poverty line. And while not a panacea for fixing all youth-related issues, the EITC and CTC are strong avenues to use in giving adolescents and their families the financial support needed to meet basic expenses, like food, housing, and even school supplies, tools, and resources students need to thrive.
One study by Brigham Young University (BYU) shows that by age five, only 48 percent of children who come from low-income households are ready for school, as compared to 75 percent of their peers coming from moderate- to high-income families. Before beginning kindergarten, the average cognitive scores of children from the highest socioeconomic group of children are 60 percent higher than the average scores of the lowest socioeconomic group. Additionally, by the age of 20, those who have not experienced poverty graduate from high school at a rate of 90 percent versus 62 percent of those who have experienced poverty.
Policymakers can play a huge role in securing the well-being of the next generation by expanding age eligibility for the federal EITC. Current eligibility requirements only allow adults, with no qualifying children, between ages 25 and 65, to claim the federal EITC. During the 2021 tax year, 17 million adults without children were eligible to claim the credit and nearly 4.8 of these 17 million workers only became eligible after the American Rescue Plan (ARP) expanded the age range to include adults aged 19-24, proving a significant number of our youth are being left out of much needed assistance after eligibility returned to pre-ARP criteria.
Officials can also improve the lives of youth by expanding the CTC. Although many families and income groups benefit from the credit, low-income families are sometimes ineligible to receive the CTC because they don’t have enough earnings to receive the full credit. When the CTC is claimed, it can be used to support access to food, financial security, and greater educational and extracurricular opportunities. It can also reduce the risk of children entering poverty as adults.
For states that don’t have their own EITC or CTC in place, mirroring how other states have approached and enacted their own legislation could create a blueprint to provide their own residents with much-needed aid. By 2021, the top 10 percent of Americans held nearly 70 percent of U.S. wealth, while the bottom 50 percent (about 63 million families) owned about 2.5 percent of wealth.
Policies carved out today will profoundly affect future generations. By investing in youth and throwing their weight behind such tools as the EITC and CTC, policymakers can actively support our communities and our nation’s ongoing success—and can concretely show care for our nation’s vulnerable youth by meeting their needs and supporting their development as this nation’s next generation of citizens.