Addressing Child Poverty: Child Tax Credit Payments and Beyond
March 28, 2022 by Shannon Henris
In 2019, the child poverty rate in the United States reached 14.4%, the lowest level in forty years. In December 2021, the rate was reduced to 12.1% when the American Rescue Plan Act of 2021 delivered expanded monthly child tax credit payments to families. Even at “low” levels, more than one in ten children in the United States is living in poverty. Children living in poverty face negative health and developmental outcomes during childhood and increased risk of chronic disease and mental illness in adulthood. Children from impoverished households also face an opportunity gap due to limited access to education and increased exposure to toxic stress that can limit their social mobility and perpetuate the cycle of poverty. In addition to the damage to those experiencing it, child poverty causes significant negative economic impacts for society as a whole.
On February 17, 2022, the Columbia University Center on Poverty and Social Policy published a policy brief highlighting that the expiration of monthly child tax credit payments in January 2022 had caused child poverty to spike by 41% nationwide. To translate this statistic into impacted lives, this amounts to 3.7 million children newly entering or re-entering poverty in the United States. News outlets have since written stories about the problem, and some politicians are speaking out against those who blocked efforts to extend the monthly payment program. But the problem of child poverty in the United States is not new and the monthly payments, while critically important to many people, were never a sustainable solution to child poverty standing alone. In addition to reinstating direct cash support for struggling families in the near-term, the Biden administration and Congress should take steps to empower families to remain out of poverty on a permanent basis.
Tax credits for dependent children have existed in some form since the passage of the 1997 Taxpayer Relief Act. Traditionally, the tax credit is refunded annually after a family files their taxes. In response to the COVID-19 pandemic’s severe impact on low-income families, the American Rescue Plan Act of 2021 expanded the child tax credit benefit (from $2,000 to $3,600 per child under age six and to $3,000 per child up to age seventeen), made the credit fully refundable, and temporarily allowed half of the amount available to families to be paid in advance on a monthly basis. Starting in July 2021, 88% of families with children in the United States were receiving advance payments. These payments allowed recipients to pay for childcare, housing, and food, and empowered some to start their own business. However, with the Build Back Better Act stalled in Congress, the advance payments stopped in January 2022 and child poverty rose to 17%. The rise in child poverty disproportionately impacted Latino and Black children.
The remainder of each family’s child tax credit will be returned to them during tax season this year. While this is expected to alleviate the immediate burden on many families, it will not keep them out of poverty long-term. Families living in poverty frequently experience income volatility, or significant changes in income over short periods of time. Children from families experiencing income volatility are more likely to experience developmental issues, low educational attainment, and negative health outcomes. Tax credit payments help to decrease income volatility and allow recipients to have funds available to meet their family’s needs more consistently. For example, a parent living in poverty may be more likely to take a sick child to the doctor right away if there is money available to cover medical expenses each month. If funds cannot be accessed until the yearly lump sum tax credit becomes available, the parent may be more likely to delay seeking care for the child.
In addition to providing advance tax credit payments to people with dependent children, the Biden administration and Congress should work together to create a layered approach to address child poverty. This plan could involve strengthening or expanding existing support programs for families with children, such as Temporary Assistance for Needy Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP). Other parts of the plan may align with initiatives to address overall poverty, such as raising the minimum wage or enhancing housing voucher programs. This plan may also include novel solutions, such as creating a permanent child allowance program beyond the existing child tax credit.
Extension of child tax credit payments has faced obstacles on both sides of the aisle, but the issue could receive bipartisan support if the public outcry about the spike in child poverty creates enough political pressure. The recent data and growing conversation around the problem of child poverty are important and have the potential to drive lasting change. Activists and voters should contact their representatives to emphasize the need to capitalize on this momentum to work toward systemic reform and long-lasting relief for low-income families.
 Child poverty rate in the U.S. from 1990 to 2020, Statista Rsch. Dep’t (Sep. 21, 2021), https://www.statista.com/statistics/200474/us-poverty-rate-among-children-under-18-since-1990.
 Zachary Parolin et al., Colum. Univ. Ctr. on Poverty and Soc. Pol’y, Absence of Monthly Child Tax Credit Leads to 3.7 Million More Children in Poverty in January 2022, at 1 (Feb. 17, 2022), https://static1.squarespace.com/static/610831a16c95260dbd68934a/t/620ec869096c78179c7c4d3c/1645135978087/Monthly-poverty-January-CPSP-2022.pdf.
 Kim L. Schmidt et al., Society to cell: How child poverty gets “Under the Skin” to influence child development and lifelong health, 61 Dev. Rev. 100983, 2-4 (2021).
 See, e.g., Nia Heard-Garris et al., Structuring Poverty: How Racism Shapes Child Poverty and Child and Adolescent Health, 21 Acad. Pediatrics 108 (2021); Luce Francis et al., Child Poverty, Toxic Stress, and Social Determinants of Health: Screening and Care Coordination, 23 Online J. of Issues in Nursing 2 (2018).
 Harry J. Holzer et al., The economic costs of childhood poverty in the United States, 14 J. Child. & Poverty 41, 41 (2008) (“[W]e estimate that childhood poverty each year: (1) reduces productivity and economic output by an amount equal to 1.3% of GDP, (2) raises the costs of crime by 1.3% of GDP, and (3) raises health expenditures and reduces the value of health by 1.2% of GDP.”).
 Parolin, supra note 2, at 1.
 See Jeff Stein, Child Poverty Spiked by 41 Percent in January After Biden Benefit Program Expired, Study Finds, Wash. Post, Feb. 17, 2022, https://www.washingtonpost.com/us-policy/2022/02/17/child-tax-credit-poverty/.
 See Jake Johnson, ‘Morally Obscene’: Sanders Blasts GOP, Manchin Over 41% Spike in Child Poverty, Common Dreams, Feb. 18, 2022, https://www.commondreams.org/news/2022/02/18/morally-obscene-sanders-blasts-gop-manchin-over-41-spike-child-poverty; Erin Snodgrass & Joseph Zeballos-Roig, Alexandria Ocasio-Cortez appears to jab at Joe Manchin for nuking child-tax-credit payments as new research shows monthly child poverty rates rising, Bus. Insider, Feb. 17, 2022, https://www.businessinsider.com/aoc-slams-joe-manchin-for-nuking-child-tax-credit-payments-2022-2.
 Child Tax Credit Overview, Nat’l Conf. of State Legislatures (Feb. 1, 2022), https://www.ncsl.org/research/human-services/child-tax-credit-overview.aspx.
 Carmen Reinicke, With the support of the child tax credit, some parents launched businesses last year, CNBC, Feb. 19, 2022, https://www.cnbc.com/2022/02/19/the-child-tax-credit-helped-some-parents-launch-businesses-last-year.html.
 Deepa Shivaram, 3.7 million more kids are in poverty without the monthly Child Tax Credit, study says, NPR, Feb. 18, 2022, https://www.npr.org/2022/02/18/1081691222/child-tax-credit-poverty.
 See Parolin, supra note 2, at 3.
 Elaine Magg, The 2021 Child Tax Credit: Implications for Health, Health Affs., Feb. 10, 2022, https://www.healthaffairs.org/do/10.1377/hpb20220119.943898/.
 Id. See also Pamela A. Morris et al., Univ. of Wis.-Madison Inst. for Rsch. on Poverty, Income Volatility in U.S. Households with Children: Another Growing Disparity between the Rich and the Poor?, at 4-5 (July 2015), https://www.irp.wisc.edu/wp/wp-content/uploads/2018/05/dp142915.pdf.
 See Steve Holt et al., Geo. L. Ctr. on Poverty & Ineq., Matching Timing to Need: Refundable Tax Credit Disbursement Options 8-13 (Nov. 2020), http://www.georgetownpoverty.org/wp-content/uploads/2020/11/MatchingTimingtoNeed-Nov2020.pdf.
 See Magg, supra note 18.
 See id.
 Child Poverty, Child.’s Def. Fund, https://www.childrensdefense.org/policy/policy-priorities/child-poverty/ (last visited Feb. 19, 2022).
 Id.; see also Nat’l Acad. of Scis., A Roadmap to Reducing Child Poverty (Nat’l Acad. Press eds., 2019), https://www.ncbi.nlm.nih.gov/books/NBK547361/pdf/Bookshelf_NBK547361.pdf.
 See Ben Gitis, Policy Considerations for Child Allowances, Bipartisan Pol’y Ctr., Aug. 23, 2021, https://bipartisanpolicy.org/blog/policy-considerations-for-child-allowances/.