As Democrats debate whether to extend the fully refundable child tax credit (CTC) extended last year this year, nearly 450 U.S. economists have spoken out to do so.
In an open letter to congressional leaders, 448 economists – who cover institutions and include several Nobel Laureates in economics – write that there is strong research indicating that expanded CTCs are “millions of children growing up in economics. United States “. dramatically improve the lives of children and promote the long-term economic prosperity of our country by reducing child poverty ”.
In fact, extending credit by 2025 would reduce child poverty from 14.2 to 8.4 percent, according to a recent analysis by the Urban Institute. In other words, 4.3 million fewer children live in poverty, a reduction of 40%.
The CTC was changed in two major ways in 2021 as part of the American Democrats’ bailout: it went from $ 2,000 to $ 3,600 and made fully refundable, meaning even the lowest-income Americans can get it. Eligible households began receiving the first of six monthly payments in July.
These changes have been particularly beneficial for low-income households over the past three months. Food insecurity declined dramatically after the first payment, as many families used their deposits for groceries. Others bought school supplies and clothing and paid utility bills, as census data shows.
Research has shown that reducing child poverty has lasting positive effects for low-income children: they are healthier, do better in school, and are more likely to work and earn more as adults. . These are the main reasons why so many economists are supporting making the Advanced CLC permanent, says Jacob Goldin, an assistant professor at Stanford Law School who specializes in tax policy and helped organize the paper.
“It’s very rare to find a problem where so many economists agree on everything,” Goldin says. “But there is very, very strong evidence right now that providing extra financial support for children growing up in low-income households has huge benefits in their lives.”
One of the main debates in Washington right now is whether parents have to work to get credit. As with other social safety net programs, some politicians argue that parents would not have an incentive to work if they knew they would receive a monthly check from the government.
But Goldin says research indicates that the income provided by the program does not significantly affect employment. And because the credit does not result in a relatively high level of income – $ 75,000 for single parents and $ 150,000 for married couples – there is no incentive not to work. The total family CTC payment amount will not decrease.
Goldin says the research summarized in the letter suggests “that the need for a job will exclude children who have the most to receive benefits.”
While it’s still not clear whether Democrats will make the expanded CLC permanent, Goldin is “optimistic” that they will.
“Democrats would like to make sure families continue to receive these payments every month,” he said.
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