Why some want the new monthly child tax credit payments to become permanent

Alexi Rosenfeld | Getty Images

Sasha Demskie this week received a welcome deposit in her bank account: a payment of $ 250 from the government as part of the new monthly child tax credit payments.

The money will be used to pay basic bills, said Demskie, 46, of Conway, Arkansas, who lost her job in April while in hospital with Covid-19.

Today, Demskie, a university-trained data analyst, has still not been able to collect state unemployment benefits.

Demskie is entitled to the monthly child tax credit payment for her 9-year-old daughter.

More from Personal Finance:
35.2 million families just received the first monthly child tax credit payment
How to Navigate the Child Tax Credit Payment Process
Child tax credit will help offset loss of key Covid-era programs

“Everything that comes from the government at the moment is badly needed,” she said.

About 35 million families were due to receive the first monthly payments of the expanded child tax credit as of Thursday. Payments are expected to continue until the end of this year.

However, advocates for the family are already pushing to make the expansion permanent.

Demskie is one of them, having signed a letter as part of a 50-state mothers group asking President Joe Biden and Vice President Kamala Harris to keep the expanded credit, including monthly payments. , to help them reconcile their responsibilities at home and at work.

“As mothers we say loud and clear: we need help,” they wrote. “A lot of moms want to be at work right now, but have been made redundant or can’t come back due to demands at home.

“It is time for our government to support us.

The expanded child tax credit was included in the American Rescue Plan Act passed by Congress in March. While the child tax credit has been around for a long time, this new version is more generous and also introduces monthly payments for the first time.

Payments include up to $ 300 per month per child under 6 and $ 250 per month for children 6 to 17.

In total, eligible families will receive up to $ 3,600 per child under 6 and $ 3,000 for ages 6 to 17. The total amounts have increased from $ 2,000 per child, provided a parent or family meets certain income thresholds.

Half of the new amounts will be available to families via monthly installments, with the rest to be paid when filing their income tax return. The credit now also includes 17-year-olds. Plus, it’s now fully refundable, so low-income people will have more money.

Overall, $ 500 million for a program that will distribute six checks seems unlikely. I think they have implemented this extension.

Ed mills

Washington Policy Analyst at Raymond James

Estimates suggest the new child tax credit and other initiatives related to the American Rescue Plan Act will help cut child poverty in half.

Therefore, many officials are also calling for the changes to be made permanent. Among them is Treasury Secretary Janet Yellen, who said in an interview this week that it was “very important to continue” the improved child tax credit.

Sustaining the new credit will depend on the acceptance by politicians on both sides of the aisle to sign the big tab.

Over 10 years, the permanent extension of the child tax credit would cost around $ 1.5 trillion, according to Shai Akabas, director of economic policy at the Bipartisan Policy Center.

Part of the reason it would be so expensive is that the expansion is not particularly well targeted, meaning it caters to a significant majority of the population – not just the most needy, Akabas said. .

House Speaker Nancy Pelosi, D-Calif., And Rep. Jimmy Gomez, D-Calif., At a press conference on the Child Tax Credit at the Barrio Action Youth and Family Center in Los Angeles July 15, 2021.

Mario Tama | Getty Images

Moreover, it is not clear whether Republicans would support its renewal, given that none of them voted for the larger package that allowed the temporary extension.

“There is at least a decent chance that it will burn out if they fail to get it through the reconciliation package,” Akabas said of Democrats pushing for a 3.5 trillion budget deal. of dollars.

While it may be difficult to make the expanded child tax credit permanent, Democrats will likely look to extend it until at least 2025, when other tax provisions expire, political analyst Ed Mills said. in Washington at Raymond James.

Also, because about $ 500 million was spent on creating the check mailing system, it also shows some commitment to the program.

“Overall, $ 500 million for a program that will give out six checks seems unlikely,” Mills said. “I think they’ve set this up to be extended, if possible.”

The last monthly check is scheduled to go out 10 days before Christmas.

“Is Congress leaving for Christmas and not extending the child tax credit?” Mills said. “I think that timing was determined.”

For families who depend on money, losing the biggest credit and monthly checks could be a tough adjustment.

“Having to deal with sudden changes that are going to happen because a temporary policy expires every year or two is just not the way we should create policies that are meant to be predictable and helpful to American households.” Akabas said. mentionned.

For Demskie, being able to count on those monthly child tax credit checks would help her plan for the long term for herself and her daughter, she said.

For now, she is counting on her father’s help and hopes to find a job so that she can save some money.

“We are in a difficult situation right now, as are thousands of us,” Demskie said.

“Planning is the key,” she added. “If I could just save the money, it would mean a lot to me.”

About Joan Dow

Check Also

Liz Weston: Can my brother or anyone get a copy of my credit report?

Dear Liz: I recently obtained copies of my credit reports from all three major credit …