President Joseph Biden and Vice President Kamala Harris spoke at the White House this afternoon. Both expressed excitement that the first Advanced Child Tax Credit payments has gone out to eligible taxpayers.
“It’s a reflection of our belief that the people of this country who need a tax cut aren’t the folks at the top – they’ve gotten plenty of tax cuts, they’re doing fine – but it’s the people in the middle, the folks who are struggling or who are just looking for a little bit of, as my dad would say, a little breathing room,” said Biden.
No wonder Biden believes this will be a historic moment for Americans. The Advanced Child Tax Credit works in a practical fashion for families as the first half of the credit will pay monthly for the next 6 months. The remaining credit will then be on their 2021 income tax return.
For children ages 5 and under, the credit is $3,600. For children ages 6 to 17, the payment is $3,000. This means for a family of four with children ages 4 and 8, parents will get $300 and $250 per child respectively. Never before has a credit paid monthly to support families.
The credit will be made eligible for families whose modified adjusted gross incomes (MAGI) are $75,000 or less for single filers, $112,500 for head of household filers and $150,000 or less for joint filers. These income limits will be subject to phase outs.
Hopes For Fighting Poverty
While the Child Tax Credit has been available to taxpayers since the Clinton Administration, this new version of the credit is seen as revolutionary in how it will impact Americans. Researchers at Columbia University’s Center on Poverty and Social Policy are estimating that this new credit could cut childhood poverty by 45%. The IRS has estimated that 39 million families and 65 million children will benefit under this plan.
Biden touted the credit’s impact. “This has the potential to reduce child poverty in the same way that the Social Security reduced poverty for the elderly,” he said.
Harris also spoke at the press conference regarding the policy implication of the payments.
“Indeed, it is the largest middle-class tax cut in generations and will lift up half of our nation’s children who are living in poverty, out of poverty,” Harris said. “In lifting up those children, and in lifting up the American family, it will lift up our entire nation.”
The hope is that with this influx of monthly cash flow, lower income families will be able to help with household costs such as rent and food. This could benefit children in providing stability and strong nutrition during a formative part of their lives. For middle class families, this payment might help make a dent in paying for childcare or saving for college.
Biden echoed that hope in his comments when he said, “This can make it possible for a hardworking parent to say to his or her child: ‘Honey, we get, you can get your new braces now. We can get you a tutor to help you in the math class you’re having trouble with. We can get you the sports equipment you need to sign up for your first team you’re going to play on.”
No Bipartisan Support
But not everyone is happy about the new credit. Senator Marco Rubio (R-Fl) issued a statement on the credit painting a more negative picture.
“Over the next six months, some American households with no working adults will receive over $6,000 in cash payments from the federal government,” he said. The way President Biden tells it, the handout is part of his administration’s ‘pro-family’ plan. In reality, he has transformed the pro-worker, pro-family Child Tax Credit into an anti-work welfare check.”
Administration Goals
Ultimately there will be studies done and economic data considered to determine whether this credit made a difference for American families. But Biden is so sure of its success that he is already pushing for an expansion of the credit until 2025. He was very clear that this new credit was important to his administration’s legacy.
“I think this will be one of the things that the Vice President and I will be most proud of when our terms are up,” he said.