Many would agree that the Federal Child Tax Credit is providing assistance for children in poverty to succeed. However, its current structure is a hindrance for those who really need to benefit from it fully. A non-profit organization proposed three ways to improve the law to better benefit low-income families.
The recent changes in the Tax Cuts and Jobs Act brought benefits to low-income families. For instance, the child tax credit given to families was increased to $2,000 per child under 17 years old and $500 to other dependents.
However, around 27 million children from families with very low income do not get the full credit, some even none at all. Under the current law, if the combined amount of child tax credits is more then the amount of federal income tax a family owes, they will receive a refund worth 15 percent of their earnings over $2,500 – up to $1,400.
Children who grow up in extreme poverty have more possibility to experience toxic stress that could eventually affect brain development. The nation’s poorest children should not be locked out from receiving full credits their family deserve.
In this regard, US Partnership on Mobility from Poverty has proposed a project with three simple ways to would reduce the number of those excluded from the CTC. The first way is to allow all earnings to be included in the calculation of CTC, rather than just after $2,500.
Secondly, to allow full $2,000 per child to be refunded instead of the $1,400 maximum. Additionally, for families with children under 6, to phase in the credit at a rate of 50 cents per dollar instead of 15 cents.
These simple changes, when combined, would increase total annual CTC benefits by around $12 million. Beneficiaries would also be increased to about two-thirds or 17 million more children. What’s more, it would not incur any new administrative costs.