The U.S. government is starting to deposit child tax credit money into the accounts of more than 35 million families.
Daniel, a 35-year-old mother of four, didn’t even know the tax credit existed until President Joe Biden expanded it for one year as part of the $1.9 trillion coronavirus relief package. Things changed for her on Thursday when the first payment of $1,000 hit Daniel’s bank account — and money started flowing into the pockets of more than 35 million families around the country.
Previously, only people who earned enough money to owe income taxes could qualify for the credit. Daniel went nearly a decade without a job because her eldest son is autistic and needed her. So, she got by on Social Security payments. And she had to live at Fairfield Court, a public housing project that dead-ends at Interstate 64 as the highway cuts through the Virginia capital of Richmond.
But the extra $1,000 a month for the next year could be a life-changer for Daniel, who now works as a community organizer for a Richmond non-profit. It will help provide a security deposit on a new apartment.
“It’s actually coming right on time,” she said. “We have a lot going on. This definitely helps to take a load off.”
The child tax credit was created in 1997 to be a source of relief, yet it also became a driver of economic and racial inequality as only parents who owed the federal government taxes could qualify for its full payment. Academic research in 2020 found that about three-quarters of white and Asian children were eligible for the full credit, but only about half of Black and Hispanic children qualified.
Democrats see this as a landmark program along the same lines as Social Security, saying it will lead to better outcomes in adulthood that will help economic growth. But many Republicans warn that the payments will discourage parents from working and ultimately feed into long-term poverty.
Some 15 million households will now receive full credit. The monthly payments amount to $300 for each child who is 5 and younger and $250 for those between 5 and 17. The payments are set to lapse after a year, but Biden is pushing to extend them through at least 2025.
The president ultimately would like to make the payments permanent — and that makes this first round of payments a test as to whether the government can improve the lives of families. The tax credit is as much about keeping people in the middle class as it is about lifting up the poor.
Biden has held out the new monthly payments, which will average $423 per family, as the key to halving child poverty rates. But he is also setting up a broader philosophical battle about the role of government and the responsibilities of parents.
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