EP 482 New Federal Tax Credit May Be a Game Changer in Reducing Child Poverty

The enhanced Child Tax Credit(CTC) was signed into law by President Joe Biden as part of the American Rescue Plan.  While temporary to start, if successful, it may well be remembered as the most important  part of that legislation.  Some social scientists are comparing its potential impacts for children and middle and lower income families as akin to what the 1935 Social Security Act has been for older Americans.  Columbia University estimates that this credit, which unlike the existing one, rolls out each month to smooth the ups and downs many families face, will cut child poverty by 45 percent.  Its impact will be even greater, they say, for African-American and Native American children.  It’s an approach already undertaken in the United Kingdom and Canada and will cost $100 billion a year, with the hope that its effect will be to reduce children’s health care costs and increase parental earning capacity by amounts that far exceed that.  To describe how it works and the goals we turn to Veronica Goodman, the director of social policy for the Progressive Policy Institute.

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