14M in Poverty Helped by Child Tax Credit Proposal

Raise 1.5 Million People in Families Out of Poverty

On October 11, 2016, Vox reported that “Hilary Clinton is proposing a policy to tackle deep poverty” writing “It is an ambitious but politically attainable plan that will lift huge numbers of families with children out of poverty. It is targeted exclusively at the poor, and the extreme poor in particular, with no money spent on the middle class or rich.”

Clinton proposes to do this by allowing poor families to begin receiving the child tax credit as soon as they begin earning money, double the credit for children ages 4 and under.

“An analysis by Chuck Marr and Chloe Cho of the Center on Budget and Policy Priorities estimates that Clinton’s plan will lift 1.5 million people above the poverty line, and bring another 9.4 million closer to the poverty line. It would increase the incomes of 5.2 million people living in deep poverty.”

Marr and Cho wrote about the proposal for the CBPP website on October 11 in the “Clinton Child Tax Credit Proposal Would Help 14 Million Families, Raise 1.5 Million People Out of Poverty,”

While Clinton’s plan will not solve the problem of poverty that has increased over the past 20 years in the United States, but it is an important first step.

When the child tax credit was initially introduced in 1997, it was a $500 refundable credit. Only families with a “positive income tax burden” qualified to receive it. This left out poor families with incomes low enough that they did not pay income tax.

Currently, after changes made during President Bush’s administration, the credit is doubled at $1,000 but it is only partly refundable – for families earning a threshold of at least $10,000 annually. The Obama administration lowered the threshold to $3,000.

“That’s great news. But one thing we’ve learned in recent years is that the 1996 welfare reform substantially increased the number of people living in desperate poverty. The University of Michigan’s Luke Shaefer and Johns Hopkins’ Kathryn Edin have found that the share of families living on less than $2 per day in cash income per person more than doubled from 1996 to 2011. That suggests that more and more families are living on less than $3,000 a year in taxable earnings, and are thus excluded from the child tax credit.”

The proposal would significantly help many low-income working families. According to CBPP, “For example, a single mother working 20 hours a week, 50 weeks a year, at the federal minimum wage while raising a toddler and a 7-year-old daughter currently receives a partial CTC of $638. Under this proposal, she would get the full $3,000 credit for a family with two children of these ages: $2,000 for the toddler and $1,000 for the older child.”

Clinton Child Tax Credit Proposal Would Help 14 Million Families, Raise 1.5 Million People Out of Poverty

Vox Article

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