By the end of Monday, tens of millions of American families will have claimed their child tax credit on their 2023 tax returns. But for many families, that credit will be hundreds, or even thousands, of dollars smaller than it could have been. And all the blame for those smaller credits belong to Senate Republicans.
In 2021, the American Rescue Plan temporarily increased the tax credit from $2,000, where it was set under the 2017 tax cuts, to $3,000 (or $3,600 for children under 6). It also made the credit available to more families and allowed households to claim the credit in advance monthly payments. As my colleague Hayes Brown wrote last year, the effects were immediate and startling: Millions of families received desperately needed pandemic relief, and the child poverty rate dropped to its lowest on record.
The Center on Budget and Policy Priorities estimates that, in the first year alone, an expanded credit would benefit 16 million children in low-income families
But the help was short lived: Republicans and a few Democrats — most prominently, Sen. Joe Manchin of West Virginia, laboring under the delusion that poor families would spend the money on drugs — refused to extend the expanded credit. The effects were once again immediate, but this time chilling: The child poverty rate more than doubled in 2022 to 12.4%, and over five million children fell back into poverty.
Entering 2024, there was hope that lawmakers would make progress toward rectifying this error. Senate Finance Chair Ron Wyden, D-Ore., and House Ways and Means Chair Jason Smith, R-Mo., agreed on a tax deal with a modestly expanded child credit until the 2017 tax package expires in 2025.
The proposed expansion was far smaller than the 2021 version: increasing credits for children from families whose incomes were otherwise too low to claim the full amount, and indexing the credit to inflation for 2024 and 2025. And the price was incredibly steep: Republicans won reversals of several corporate tax increases in the already incredibly business-friendly 2017 tax cuts. But even so, the Center on Budget and Policy Priorities estimates that, in the first year alone, such an expanded credit would benefit 16 million children in low-income families, with those households receiving at least $630 on average. An estimated 40 percent of low-income families would receive $1,000 or more.
At the end of January, the deal easily passed the House, 357-70. Endorsements poured in from all sides. But progress stalled out in the Senate, where the bill has languished ever since. Earlier this week, Sen. Josh Hawley, R-Mo. a Republican who supports the bill, told NBC News’ Sahil Kapur that the deal is “on life support.”
Led by Idaho Sen. Mike Crapo, the senior Republican on the Finance Committee, Republican senators have claimed to be negotiating in good faith. However, the changes they’ve demanded would scuttle Democratic support for a bill already tilted toward corporate tax breaks or require finding entirely new sources of funding. Wyden told NBC News that when he offered to accept Crapo’s top demand — and eliminate a “look back” policy that would let taxpayers use the previous year’s income to receive a higher credit — not a single GOP vote shifted. As Wyden observed, “the reality is this wasn’t something that Senate Republicans wanted to do.”
Passing a tax bill that makes the president look good — mailing out checks before the election — means he could be re-elected.”
Sen. Chuck Grassley, R-Iowa
Then why hasn’t Crapo just ended negotiations? For the same reason his Republican colleagues don’t want to help millions of families: politics. The day the deal passed the House, Sen. Chuck Grassley, R-Iowa, let the mask slip: “Passing a tax bill that makes the president look good — mailing out checks before the election — means he could be re-elected,” he told reporters, “and then we won’t extend the 2017 tax cuts.”
In a Wall Street Journal op-ed, Sen. Thom Tillis, R-N.C., echoed Grassley in only slightly less cynical terms. “If the Wyden-Smith bill becomes law,” he complained, “all Republican leverage” against a permanent expansion “will be lost.” However, by pretending to negotiate, Republicans hope to avoid the awful optics of their opposing a widely popular tax credit.
The practical effect, though, is the same: Millions of families are denied relief. To repeat, these benefits are no longer hypothetical. The 2021 expansion was a resounding success. More broadly, pilot programs have found again and again that when low-income people are given more cash, it reduces poverty and — contrary to conservatives’ myths — recipients spend the money responsibly.
We shouldn’t be haggling over modest child tax credits; we should, instead, be massively expanding them and other anti-child poverty programs. In 2019, a National Academy of Sciences study commissioned by Congress estimated that the U.S. could cut child poverty by half in a decade, at a cost of $90.7 billion per year. That might sound like a lot, but it’s less than a tenth of child poverty’s economic cost: $1 trillion per year.
This GOP calculus is breathtaking in its cruelty. They’re making sure that lifting families out of poverty takes a back seat to Republicans’ electoral fortunes. And when children suffer as a result? So be it.
