A new report from the Joint Economic Committee details how the monthly Child Tax Credit (CTC) payments have reduced childhood poverty and improved family finances in its first six months.
The CTC payments are part of President Joe Biden’s American Rescue Plan. Food has consistently been the top category for CTC spending, while many also used the payments for school expenses before the start of the 2021-22 school year and childcare.
The Treasury Department will distribute the final round of payments on December 15. However, the pending Build Back Better Act would extend the expanded CTC for another year. The Build Back Better Act (BBBA) has passed in the House and is currently under consideration in the Senate. For the payments to continue, the extension must be approved via the BBBA in the Senate.
An expanded CTC would boost consumer spending by $27 billion, generate $1.9 billion in revenues from state and local sales taxes, and support over 500,000 full-time jobs, according to the JEC report. For every $1 of investment, the expanded CTC is estimated to provide $8 in social and economic benefits. The expansion of the CTC is expected to reduce childhood poverty by 40 percent and lift 4 million children out of poverty.
“The expanded Child Tax Credit is one of the largest-ever single-year tax cuts for families with children, helping to offset household costs when families need it most. During this strong but uncertain recovery, the advance CTC payments have been a critical lifeline, bolstering household incomes for families across the country,” JEC Chair Don Beyer (D-VA) said. “Evidence shows investing in the economic well-being of children and families is crucial to boosting overall economic growth and shared prosperity. By reducing financial hardship, improving life outcomes for children, and helping to close the racial wage gap, the expanded CTC will generate economy-wide returns for decades to come. To cement this historic reduction in child poverty and promote sustained economic growth, Congress must immediately pass the Build Back Better Act.”