Don’t kill the Child Tax Credit

TAKUYA AMAGAI: The fate of the Child Tax Credit is currently unclear in Congress. Democrats have added the extension of the Child Tax Credit to the Build Back Better package, making its way through Congress. However, Senator Joe Manchin of West Virginia is complicating the path for the Child Tax Credit by insisting on the addition of a work requirement. A work requirement will significantly diminish the effectiveness of the Child Tax Credit by requiring recipients to endure administrative burdens. 

The Child Tax Credit saw a significant expansion to its benefits thanks to the American Rescue Plan (ARP). The law expanded the Child Tax Credit for a single year from $2000 per child to $3600 for children below the age of 6 and increased the tax credit to $3000 for children under the age of 18. Under the ARP, the Child Tax Credit is fully refundable, which means that families who owe minimal or no federal tax will get a check for the entire amount. The Treasury Department estimates that the expansion of the Child Tax Credit will lift more than 5 million children above the poverty line.

Senator Joe Manchin’s proposal will cause serious harm to the accomplishments of the Child Tax Credit. A work requirement to the Child Tax Credit could limit the number of eligible beneficiaries. Requiring parents to work could cut off much-needed assistance to families who are in desperate need. Before the American Rescue Plan, families with less than $2500 in earned income did not qualify for the Child Tax Credit. A single parent with two children who earned between $2500 and $30000 received partial credit. These facts point to the existence of families who will suffer financially from the reintroduction of income restrictions.  By instituting work requirements, Senator Manchin risks doing serious harm to families who were previously unable to receive the tax credit and set back the administration’s goal of reducing child poverty. 

Moreover, the addition of a work requirement could dissuade eligible beneficiaries from applying for the program. This is evidenced by existing administrative burdens preventing some of the potential recipients from receiving the benefits. There are estimates that 7 million children currently do not receive the benefits because their households do not file taxes, complicating the Internal Revenue Service’s (IRS)  job of distributing Child Tax Credit to all beneficiaries. While the IRS can provide the Child Tax Credit to some of the families if they separately signed up for the stimulus payment, the fact remains that millions of eligible families have missed out on the benefit because they did not complete a separate process. Adding a work requirement to the tax credit would exacerbate the situation by increasing the likelihood that the eligible family would not receive the benefit. These beneficiaries may never sign up for the benefits because they were never informed of missing paperwork or were discouraged from signing up because of the lengthy process required to get the benefit.

I am not arguing that there should be absolutely no restrictions on who gets the Child Tax Credit. For example, we could make an argument that Child Tax Credits shouldn’t go to high-income families who don’t need government assistance to raise their children. But the suggestion by Senator Joe Manchin to impose work requirements risks doing significant harm to families by imposing administrative burdens setting the US back from reducing child poverty.

Takuya Amagai is a Masters of Public Policy candidate at the McCourt School of Public Policy at Georgetown University.