By Laura Duffy
After years of uncertainty, Congress may be on the verge of passing a $78 billion tax package to partially revive an expanded Child Tax Credit and business tax incentives for research and development that expired at the end of 2021. These popular — yet costly — provisions became linked in 2022 by Democrats arguing that benefits for working families should accompany tax breaks for businesses, but compromise has remained elusive until now. Although the deal, introduced Monday by Senate Finance Committee Chairman Ron Wyden (D-Ore.) and House Ways and Means Chairman Jason Smith (R-Mo.), is imperfect, it would temporarily reduce child poverty, incentivize innovation and minimally add to the national debt.
Expanding the Child Tax Credit (CTC) can play a key role in reducing child poverty, which is both a moral imperative and a smart investment in children’s health, educational and economic outcomes later in life. In 2021, Congress temporarily provided a pandemic-era expansion to the CTC to all families. These changes were expensive: If made permanent, they would have cost $1.6 trillion between 2022 and 2031. Yet, instead of adjusting the policy to provide more targeted support, lawmakers allowed the changes to completely expire.
Currently, the full $2,000-per-child value of the CTC isn’t available to many families that need it most.
This op-ed was originally published in The Messenger on January 20, 2024.
