For the first time in half a year, families on Friday are going from the Child Tax Credit without a monthly deposit
CHARLESton, WA – For the first time in half a year, on Friday, families are going without a monthly deposit from the Child Tax Credit – a program that was intended to be part of President Joe Biden’s legacy, but has instead emerged as someone worthy of government support. Yes, a flash point on this.
Retired Andy Roberts of St. Albans, West Virginia, relied on Czech to help raise his two young grandchildren, who were adopted by him and his wife as the birth parents recover from drug addiction .
Roberts is now off $550 a month. That money helped pay for Girl Scouts, ballet and acting lessons, and children’s shoes, which Roberts noted are more expensive than adult shoes. The tax credit, he said, was a “godsend.”
“If you have anything to tighten, it’s going to make you tighten your belt,” Roberts said of losing the pay.
The monthly tax credits were part of Biden’s $1.9 trillion coronavirus relief package – and the president has proposed extending them for another full year as part of a separate measure focused on economic and social programs.
But Democratic Sen. Joe Manchin of Roberts’ home state of West Virginia objected to the credit increase over concerns that the money would discourage people from working and that any additional federal spending would fuel inflation that has already climbed to nearly 40. – year high.
Last month, 305,000 West Virginia children benefited from the extended credit, according to IRS data.
Munchkin’s opposition in an equally divided Senate derailed Biden’s social spending package and led to expanded tax credits that expire in the middle of every month ending in January. This is reducing family income at the same time that people are battling high prices.
However, households received only half of their 2021 credit on a monthly basis and the other half after filing their taxes in the coming months. The size of the credit will be cut in 2022, with full payments only to households that have earned enough income to pay taxes, a policy option that would limit benefits to the poorest households. And the credit for 2022 will come only if people file their taxes early next year.
West Virginia families interviewed by the Associated Press highlighted how their grocery and gasoline bills have risen and said they would need to get by with less financial cushion than they were a few months ago.
Roberts, who worked as an auto dealer for five decades, said, “You have to learn to adapt. You really never dreamed that everything would suddenly explode. You go downstairs and get a package of hamburgers.” And it’s $7-8 per pound.”
According to the Biden administration’s math, the expanded child tax credit and its monthly payments were a policy success that paid off $93 billion in six months. More than 36 million households received payments in December. Payments were $300 monthly for each child ages five and younger, and $250 monthly for children between the ages of six and 17.
The Treasury Department declined to answer questions about the end of the expanded child tax credit, which has become a politically sensitive issue as part of Biden’s nearly $2 trillion economic package that has stalled in the Senate .
Manchin has advocated some form of work requirement for those receiving payments, out of concern that automated government aid could cause people to quit their jobs. Still, his primary objection in a written statement last month sidestepped that issue, as he expressed concerns about inflation and the one-year extension hiding the true costs of the tax credit that could be permanent.
“My Democratic colleagues in Washington are determined to dramatically reshape our society in a way that leaves our country even more vulnerable to the threats we face,” Manchin said. He said he was concerned about inflation and the size of the national debt.
The Census Bureau surveyed the spending patterns of recipients during September and October. About a third used the credit to pay for school expenses, while about 25% of families with young children spent it on child care. About 40% of recipients said they mostly depend on money to pay off debt.
There are varying benefits in terms of improving outcomes for poor children, whose families previously could not use the full tax credit because their earnings were too low. An analysis by the Urban Institute estimated that expanding credits developed by the Biden administration would reduce child poverty by 40%.
The tax credit did not lead to an immediate exit from the workforce, as some lawmakers feared. The Bureau of Labor Statistics reported that the percentage of people with jobs increased from 58% a month before monthly payments began to 59.5% last month. The same trend occurred in West Virginia, where the employment-population ratio rose to a pre-pandemic level of 52.9%.
There is an academic debate over whether credit can suppress employment in the long term, with most studies showing that the effect will be statistically negligible.
Academics studying tax credits are torn over how a sustainable program would affect the economy and child welfare.
Katherine Michaelmore, an associate professor of public policy at the University of Michigan, and two other researchers estimated that about 350,000 parents would drop out of the workforce, a figure not so significant in an economy with roughly 150 million jobs.
Michaelmore said the long-term impact of the permanent tax credit will have a positive effect on the economy, as children who grow up in high-income families “perform better in school, are more likely to graduate from high school. It’s down the road.” May be down 50 years but there will be more cost savings in the future.”
One of the major questions for policy makers is whether the bureaucracy or parents are better able to spend money on children. Manchin has proposed a 10-year, funded version of Biden’s economic proposal that would eliminate the child tax credit focus to avoid sending money directly to families and instead promote finance programs like Universal Pre-Kindergarten .
“It’s an ethical question of whether you trust the families to make their own decisions,” Michelmore said.
Hairdresser Chelsea Woody is a single mother from Charleston, West Virginia, who works six days a week to make a living. The expanded Child Tax Credit payment helped pay for her son’s daycare, as well as allowed him to spend on clothing for her.
“It really helps a lot. It’s an extra cushion for me instead of worrying about how I’m going to pay the bill or anything,” Woody said as he loaded groceries into his car. Was. “It’s helpful for a lot of people. It helps weed out working families because we struggle the most. I’m hardly at home with my baby because I work all the time.”
Hussein reported from Washington and Bock reported from Baltimore.