For the second half of 2021, millions of families received monthly child tax credit checks. Implementing a permanent child allowance could bring in billions in value, according to a new paper but progress to revive even the expanded child tax credit is stalled or nonexistent.
By: Juliana Kaplan.
Original Post: https://www.businessinsider.com/making-child-tax-credit-permanent-1000-return-on-investment-report-2022-3
As part of a sweeping 2021 economic recovery package, America marked a historic first: It distributed checks directly to parents every month for six months. Making a measure like that permanent could have a big pay-off for parents — and the economy, a new report says.
As part of President Joe Biden’s American Rescue Plan, lawmakers expanded the child tax credit, and made it fully refundable, with millions of parents eligible to receive up to $300 per child every month. Those payments were a “godsend” for some, with the first payment alone keeping three million children out of poverty.
Now, a new working paper from researchers at Barnard College, Columbia University, and the Open Sky Policy Institute looks at what might happen if Congress made those payments to parents permanent.
Even on a smaller scale, a cash infusion in the form of a child allowance would have big benefits for lower-income families.
As a benchmark, researchers said that low-income families with one child that received a $1,000 increase in household income would see adult earnings for that child increase by $1,444. But “the biggest improvements are in children’s health in adulthood and longevity, representing over twice the initial investment.” Single parents also see a boost to their health to the tune of $816.
Broadly, they estimate that expanding the child tax credit permanently to a “near-universal” child allowance would cost about $97 billion annually. That would be counteracted, however, by “social benefits” that are worth around $982 billion yearly, including improved health and longevity for kids, which the researchers value at $424 billion. That leads to big savings for public healthcare and insurance premiums. Crime would also fall, lightening the taxpayer load.
It would also reap direct financial returns, the report said. All the kids whose families got checks would see future earnings go up by a total of $270 billion in their lifetime — leading to billions more collected in taxes.
All in all, taxpayers will save $135 billion if the credit is expanded, in addition to the benefits that parents and children reap.
However, the likelihood of checks to parents becoming permanent anytime soon is low. Monthly checks for parents wound down in December, with 3.7 million kids falling back into poverty in January.
“The unforeseen things, like car repairs, you really don’t have that money saved up for that,” Alexandra Demskie, a mother of three in Arizona, told Insider’s Leo Aquino. “And the $250 really came in handy.”
Democrats had been eyeing a one-year extension of the credit, which centrist Democrat Sen. Joe Manchin tanked with last-minute demands over paring down the checks. Manchin later pronounced the Build Back Better Act “dead.”
In the meantime, Democrats aren’t pushing to restart the checks.
