Revised May 19, 2008

FAMILIES HELPED BY THE CHILD TAX CREDIT EXPANSION
WORK HARD IN LOW-PAYING JOBS
Nursing Home Aides, Cooks, Pre-School Teachers, and
Construction Workers Would Get a Boost
by Sharon Parrott, and Arloc Sherman

The tax “extenders” bill adopted last week in the House Ways and Means Committee (H.R. 6049) would temporarily expand the Child Tax Credit by lowering the earnings threshold that families must meet to qualify for the refundable portion of the credit.  Under the bill, families would qualify for a refundable CTC if their earnings exceeded $8,500; under current law, by contrast, families must have earnings above $12,050 in 2008 to qualify for the refundable child tax credit.

According to the Tax Policy Center, this provision would benefit 13 million children — including 2.9 million children who would become newly eligible for the benefit and 10.1 million children who would see their CTC increased due to this provision.  Families that are “newly eligible” are those with incomes between $8,500 and $12,050.  A broader group of low-income families would see their CTC increase as a result of this provision, because the size of their credit is based on the amount by which the family’s earnings exceed the threshold.

Who are these families that would benefit?  Census dataⁱ provide important information about these families and the jobs the parents hold:

• Most of the children helped live in families in which a parent works throughout the year.  Some 70 percent of the children who would benefit live in families in which a parent works 30 or more hours per week for at least 50 weeks during the year.  A majority of the remaining families experienced periods of unemployment during the year, but when employed worked at least 30 hours per week.

• Many of the children helped live in families that include individuals with disabilities.  Nearly one in ten children — 1.1 million children — who would benefit live in a family where either a parent or a child has a disability.  An expanded CTC would provide assistance to these families in which parents struggle to maintain jobs and meet the health and other expenses they incur due to the disability.

• The parents who would be assisted work in a broad range of low paying jobs; many perform difficult jobs that provide critical services, such as caring for the elderly or teaching young children.
   
  • 480,000 parents provide health care services to the elderly or the ill as nursing home workers, home health aides, personal care assistants, medical assistants, and other low-paid health care professionals.
     
  • 240,000 parents provide child care, serve as teaching assistants, or are preschool or kindergarten teachers.
     
  • 310,000 parents earn a living by cleaning or maintaining the grounds of homes, office buildings, schools, or other community institutions.
     
  • 410,000 parents work as cashiers in grocery stores and a broad array of other businesses.
     
  • 470,000 parents work as cooks, waiters or waitresses, or assist cooks with food preparation.
     
  • 360,000 parents earn a living as construction workers, carpenters, or painters.
     
  • 120,000 parents work as laborers in the agriculture sector.

Table 1 provides state-by-state estimates of the number of children who would benefit from the proposed CTC expansion.

End Note:

ⁱ All of the figures presented here are CBPP calculations based on the March 2006 Current Population Survey.  Estimates of the number of children who would benefit from the CTC provisions that are based on the March 2006 Current Population Survey are somewhat lower than those computed by the Tax Policy Center.  Because TPC has more complete data on tax filing units and tax filers’ taxable income than are available from the Census Bureau, the TPC figures on the total number of children who would benefit are generally considered more accurate than the estimates using the March CPS data.  Thus, the estimates we compute from the March CPS data were adjusted to match the TPC figures for the total number of children helped.  (The TPC data do not provide information about the characteristics of those helped; that information is only available from the detailed information collected by the Census Bureau.)