Pandemic-related expanded child tax credits: Are they having an impact?

They are expected to help bridge the health and well-being divide for children.
Published: Dec. 8, 2021 at 10:39 PM CST
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Parent Yoshica Williams picks up her children, Aspen and Adrian from school and appreciates the...
Parent Yoshica Williams picks up her children, Aspen and Adrian from school and appreciates the tax credits families are receiving.(Source: WVUE)

NEW ORLEANS (WVUE) - The ongoing COVID-19 pandemic has strained the budgets of many families and because of the ongoing health crisis nearly all U.S. families are getting upfront help. And indications are it is helping families and experts say it will lift millions of kids out of poverty and help better off families as well.

Yoshica Williams waited to pick up her 4-year old daughter Aspen from a New Orleans daycare center. Later she drove across town to get her 11-year-old son Adrian from his school. Like millions of families across the country, Williams and her husband are benefitting from the monthly tax credit payments that are part of the 2021 American Rescue Plan put forth by President Biden and approved by Congress.

“It’s helpful, it’s definitely helpful, however, it could be a little more, only because bills and food is extremely high,” said Williams.

The ARP law increased the federal child tax credit from $2,000 per child to $3,000 per child for children over age 6 and $3,600 for kids under six.

Williams was skeptical it would happen.

“At first I didn’t believe it one because, they, it’s always a tug of war when it comes to giving out something,” she said.

But the monthly payments to families did start on July 15.

“I was definitely happy about it because everybody needed that extra help especially at that time,” said Williams.

And all working families get the full tax credit if they make up to $150,000 annually or $122,500 for a single parent, according to the White House.

Williams is a cosmetologist and image consultant, and the pandemic affected her livelihood.

“Oh, absolutely, being that I work for myself,” she said.

Teresa Falgoust is Director of Data and Research for Agenda for Children in New Orleans.

She agrees with others who think the tax credits will be transformative, in terms of reducing child poverty.

“It is the single most important anti-poverty policy that we have passed in our lifetimes. In the United States as a whole, we expect it to reduce child poverty by 40%, and in Louisiana, because we have such high child poverty rates we‘re actually expected to see reductions of 53%,” said Falgoust.

According to the Annie E. Casey Foundation, 18% of children in the U.S. are living in poverty, and in Louisiana, it is 27%.

Falgoust says growing up in poverty can have long-lasting consequences.

“It continues through the life course. Unfortunately, we see kids who are born in poverty are more likely to face negative effects in school, like lower rates of reading proficiency, lower rates of math proficiency and ultimately they’re less likely to graduate from high school which isn’t a surprise if you need money to make ends meet, you’re less likely to be able to stay in school,” she said.

The expanded program also provides tax credits to low-income families who in the past were not required to file federal tax returns.

Shavana Howard is Asst. Secretary for Family Support with the Louisiana Department of Children and Family Services. She says the monthly tax credit payment do not impact food stamp eligibility.

“It doesn’t count as income or a resource for the first 12 months following the time that they actually receive those payments,” said Howard.

Census data suggests the tax credits are working. The Census Bureau’s Pulse Survey which measures household experiences during the pandemic says 11% of U.S. households with children reported having food insufficiency June 23 to July 5 of this year, a period before the tax credit payments began. And conversely, from July 21 through August 2 when the money was rolled out the rate of food insufficiency dropped to 8.4%.

Falgoust says data shows families are using the money for necessities.

“The majority families are using it on things like rent, over 60% of families are using the Child Tax Credit on that, over a third were using it on things like schools supplies or clothing for their kids,” said Falgoust.

Howard said the tax credits are not a cure-all and in Louisiana, efforts continue to help families in other ways.

“I would also state still that a lot of individuals who are on our programs are in poverty, they’re in deep generational poverty for some so the child tax credit is good, but it’s not going to be enough to lift all the families out of poverty,” said Howard.

Still, Falgoust believes the impact of the expanded tax credits is tremendous and says families across-the-board are being helped.

“The national experts estimate that 94% of kids in Louisiana are going to benefit from these child tax credits which is virtually everybody except for the most wealthy children in our community, and so I think that’s something very important to note, this isn’t just about low-income families,” Falgoust stated.

Williams says she and her husband are definitely using the money for their kids.

“Most of it goes toward their tuition, well to Aspen’s tuition and AJ’s extra curriculum that he needs to keep him going during school, so that helps me with that,” she said.

Daycare allows her to work.

“The nursery business has $201 a week,” said Williams. “You got to put your child in a place where it fits, so if it’s expensive it’s pretty much like a lot, but you’ve got to make do.”

Falgoust is a parent with a young child.

“So, my son started childcare for the first time as those first payments were hitting last fall, well this fall rather and I would say it definitely lessens the impact of those new payments that I’m making every month for the first time, it’s made a much easier transition financially for my family,” Falgoust said.

But with inflation some people worry that could cancel out the benefit of the payments families are getting.

“The food is extremely high. I went to the store and when a gallon of milk is roughly almost $5 bucks now which is a lot,” Williams stated.

Falgoust does not believe higher prices will totally negate the effects of the tax credits.

“We expect that it may slightly erode the impact of the tax payments, but overall because the tax payments are so large it really is going to have a transformative effect no matter what for families,” she said.

The upfront payments will expire at the end of the year but the U.S House has voted to extend them for another year and a vote is expected in the U.S. Senate on whether the extension will happen as Biden and Democrats want.

“I just hope that they pretty much extend it, I really do because it really helps,” said Williams.

She is more concerned for other families who will have it really hard if the monthly checks stop.

“It would affect me but I don’t think it would affect me extremely like it would the other people who are actually dependent on it. Like, I’m not co-dependent on it but I really appreciate it because it’s a boost for me,” said Williams.

And according to the Census Bureau, the 2020 stimulus checks lifted over 11 million people out of poverty that year, many of them children.

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