Just Taxes Blog by ITEP

For the Holiday Wishlist: Child Tax Credit Improvements That Would Lift Millions Out of Poverty

For the Holiday Wishlist: Child Tax Credit Improvements That Would Lift Millions Out of Poverty

December 18, 2019

Aidan Davis
Aidan Davis
Senior State Policy Analyst

A recent New York Times article serves as a stark reminder that child poverty remains a persistent problem in this country and that the policies we have in place to help this vulnerable population need immediate attention and improvement.

The federal Child Tax Credit, worth up to $2,000 per dependent age 16 or younger, is designed to boost the income of parents and other guardians. But approximately one-third of children do not receive the full credit because it requires their parents to work, is phased-in based on earnings and is only partially refundable. As a result, many parents earn too little to receive the full benefit. As counterintuitive as that may seem, it’s the policy on the books. The 2017 Tax Cuts and Jobs Act, or TCJA, took steps to expand the federal Child Tax Credit, but largely left out more than 24 million low- and moderate-income children from receiving any meaningful benefits.

As dire as this may seem, the silver lining is that policymakers–at both the federal and state levels–have the tools they need to address these issues. The tax code can, and should, be used as a poverty-fighting tool.

ITEP published a report earlier this year with Columbia’s Center on Poverty and Social Policy that focused on Child Tax Credit options for state lawmakers to consider. The bold proposals analyzed in our report would make major strides in reducing both poverty and deep poverty among children, while making state tax systems more equitable. And they could be enacted as soon as states begin their legislative sessions next year, even in the absence of congressional action.

Roughly one in six children live in poverty in the United States. A state-level Child Tax Credit could dramatically reduce this figure if it is designed with a particular emphasis on those families left out under the flawed structure of the federal credit. There’s a clear opportunity here for lawmakers to enact tangible, targeted policies that would have lasting positive effects on children for the rest of their lives. ‘Tis the season?