The expansion of the Child Tax Credit is a bold action to reduce child poverty, built on a solid foundation of research evidence. As of July 2021, families of nearly 60 million eligible children started receiving their first advanced payment from the expanded Child Tax Credit, which increased the dollar amount of the credit, made it payable on a monthly basis, and extended eligibility to families who previously earned too little to qualify for the full credit. Unfortunately, these changes are set to expire at the end of the calendar year unless Congress either makes them a permanent feature of the tax code or extends the credit beyond 2021.
As policymakers consider making permanent the expansion of the Child Tax Credit, researchers must support their efforts to track the credit’s reach and impact, paying close attention to which aspects of its structure and administration are helpful and which create or maintain barriers to families’ access. Extending the principles that informed the expansion and incorporating the lessons learned from its rollout will allow policymakers to improve the reach and effectiveness of the tax credit, as well as a host of other safety net programs. Here are some examples of how these principles could be extended:
Ensure that programs designed to support economic stability and well-being are accessible to all households, including those most in need.
How cash benefits are paid affects how many, and which, families benefit from them. Benefits paid through the tax system are not typically designed to reach parents whose incomes are too low to file tax returns. These families are often among the poorest and include those living in deep poverty, a condition that is particularly detrimental for children. Tax-based benefits may also be difficult to access for families without access to internet, financial services, stable housing, or accurate sources of information about the tax process.
In the case of the Child Tax Credit, the IRS has established a claims portal for non-filers. Researchers should use the upcoming months of the expanded Child Tax Credit to assess whether this is an effective mechanism, which families the policy is not reaching, and how to improve policy moving forward. And let’s apply those lessons to other benefits paid through the tax system—most notably the Earned Income Tax Credit.
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