Pro-Family and Pro-Growth
American families need Congress to work for them now more than ever. That means lawmakers must put the theatrics aside and do the hard work to deliver results for parents and their children. With inflation and rising living costs, too many families are struggling to manage daily expenses, let alone the expenses that come with raising a child. Bipartisan action is needed now to help Americans weather current economic storms. A renewed push to extend and strengthen the Child Tax Credit (CTC) is a necessary first step, and expressed interest from the White House to Congress shows that there is a deal to be made here.
The CTC, as we know it, is set to expire in 2025. While that may seem like plenty of time to figure out a solution, we’ve seen before (like with Senator Mitt Romney’s Family Security Act 2.0) how this policy with seemingly universal appeal can get stuck in the mud of partisan bickering and mismanaged priorities. If Congress allows the policy to reach its 2025 sunset, American parents will see the tax break they currently enjoy reduced from $2,000 to $1,000 annually.
With inflation, however, this is much more than a $1,000 reduction. Bringing the credit down to $1,000 annually reverts it back to its 2001 level. $1,000 today is about equal to $586.41 in 2001, meaning that a reversion back to a 2001 CTC would leave parents worse off with about half of the benefit they would have seen 22 years ago. This would truly be a crisis for the many families that rely on the current CTC and lawmakers must move now to put this at the top of the agenda.
The CTC has a proven record of helping American families successfully raise their children. For one thing, the credit lightens the load for families’ daily expenses. Data shows that money parents save from the credit largely goes towards groceries, utilities, savings, etc. In other words, it directly helps parents provide a better quality of life for their children by easing the burden of meeting basic necessities. This may be why the National Association of Counties recently called for a permanent expansion of the program, adding that the American Rescue Plan Act’s temporary CTC expansion nearly cut child poverty rates in half in 2021.
These effects have a broader economic impact as well. With more money at their disposal, Americans would be empowered as both parents and consumers, with more flexibility to spend at local restaurants and other businesses. What’s more, evidence shows that the CTC is a pro-work policy that gives parents greater flexibility to stay in the workforce or start their own businesses. Taxpayers would also rejoice at the myriad benefits of a strengthened CTC. Studies point to $7 in taxpayer savings for every $1 invested through the CTC.
The ground is fertile here for bipartisan compromise. Both parties have an interest in delivering concrete results for their constituents, and the CTC is a perfect vehicle to achieve this goal. From the direct benefits for parents to the broader economic ripple effects, the CTC is a tax break with clear social benefit for average, working Americans. It is no wonder why recent polls show that 75 percent of Americans support the policy. It is also no wonder why Democrats and Republicans alike have worked many times before to update this policy. Republicans led the charge with the Taxpayer Relief Act of 1997, and it was most recently included in Democrats’ 2021 pandemic response. The 118th Congress should take a cue from the past and move aggressively to meet today’s demand for reform.
It’s time for lawmakers to quit dragging their feet on a common sense, widely popular policy. Strengthening the CTC is a win-win for both sides of the aisle as well as the American people. Acting now on CTC could spur much-needed action on other common sense tax reforms that promote clear societal benefits like research and development. CTC could be the first step towards a brighter future for all Americans and highlights the need for bipartisan negotiation and compromise.
Liam deClive-Lowe and Paolo Mastrangelo are the Co-Founders & Co-Presidents of American Policy Ventures, a new project which will actively work to support members of Congress working to find bipartisan solutions to our nation’s most pressing issues.
