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POLICY INSIGHT
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Biden-Harris Child Tax Credit Expansion Would Lift 10 Million Children Above or Closer to Poverty Line

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Senior Director of Federal Tax Policy

President Biden’s $1.9 trillion emergency relief plan includes a Child Tax Credit expansion that would lift 9.9 million children above or closer to the poverty line, including 2.3 million Black children, 4.1 million Latino children, and 441,000 Asian American children. It also would lift 1.1 million children out of “deep poverty,” raising their family incomes above 50 percent of the poverty line.

To do that, the Biden plan would make the credit fully available to 27 million children — including roughly half of all Black and Latino children — whose families now don’t get the full credit because their parents don’t earn enough, and raise the maximum Child Tax Credit from $2,000 to $3,000 for children between ages 6 and 17 and to $3,600 for children under 6.

As we’ve written, COVID-19 and its economic fallout highlighted and widened a range of fault lines — of income, race, education, and occupation — in our economy and society generally. Even before the crisis, people who have lower incomes, are Black or Latino, have less than a college education, or work in face-to-face service jobs faced barriers to employment and opportunity. COVID-19 and the economic crisis hit these groups harder, and they will take longer to recover financially from it than people on the other side of these fault lines. Many in “essential” jobs have faced a higher risk of disease and death due to their jobs, while many others have lost their jobs due to pandemic-related closures.

Children have been particularly hard hit. Between 8 and 12 million children live in a household where the children didn’t eat enough because the household couldn’t afford it, according to Census data collected from November 25 to December 7. These same children also have a higher risk of losing school instruction time due to the pandemic; “[l]earning loss will probably be greatest among low-income, black, and Hispanic students,” according to a McKinsey report. These are exactly the children the Biden proposal would help the most. Providing additional income through such a policy boosts not only children’s school performance but also their life prospects, rigorous research shows.

To understand the impact of the proposed Child Tax Credit expansion, consider these examples:

  • A single mother of a toddler, who earns $10,000 a year providing in-home care to older people (with work hours that fluctuate significantly from month to month), now receives a Child Tax Credit of $1,125. Under the Biden plan, she’d receive $3,600, a gain of $2,475.
  • A single mother with a 4-year-old daughter and 8-year-old son, who is out of work for the year due to a health condition, now receives no Child Tax Credit at all, adding to the family’s financial insecurity. Under the Biden plan, she would receive the full Child Tax Credit of $3,600 for her daughter and $3,000 for her son to help with the children’s expenses.
  • A married couple in which one spouse earns $20,000 as a short-order cook and the other cares for their 3-year-old son and 7-year-old daughter now receives a credit of $2,625 — well below the $4,000 credit that a higher-income family with two children receive. Under the Biden plan, they would receive the full Child Tax Credit of $3,600 for their son and $3,000 for their daughter, or a gain of $3,975 for this family.

The Child Tax Credit expansion would provide important help to people in a myriad of jobs that pay little and often have fluctuating schedules, including people caring for the elderly, driving buses, cooking and serving meals, and doing many other kinds of important work (see table).

People Working in Selected Essential Occupations Who Would Benefit From Biden-Harris Child Tax Credit Expansion
Occupation Number of workers who would gain Workers who would gain as a share of all in occupation
Cashiers 1,095,000 31%
First-line supervisors/managers of retail sales workers 1,082,000 31%
Nursing, psychiatric, and home health aides 816,000 36%
Cooks 673,000 30%
Child care workers 497,000 38%
Miscellaneous agricultural workers, including animal breeders 384,000 38%
Food preparation workers 327,000 29%
Medical assistants 297,000 47%
Health diagnosing and treating practitioner support technicians 227,000 32%
Bus drivers 186,000 29%
Butchers and other meat, poultry, and fish processing workers 122,000 32%
Combined food preparation and serving workers, including fast food 112,000 33%
Dishwashers 68,000 29%
Bakers 67,000 34%
All occupations 53,594,000 32%

Source: CBPP estimates based on U.S. Census Bureau’s March 2019 Current Population Survey, using 2020 tax parameters and incomes adjusted to 2020 dollars

Expanding the Child Tax Credit enjoys broad and deep support among congressional Democrats and was part of several bills that Democrats recently introduced, including both versions of the Heroes Act, the American Family Act, and the Working Family Tax Relief Act. Moreover, key Republicans, such as Senators Mitt Romney and Mike Lee, have indicated that the Child Tax Credit is an area of potential bipartisan cooperation during the Biden Administration. Such cooperation is urgently needed to help millions of low-income families repair the damage from COVID-19 and its economic fallout. The Biden plan seizes this opportunity for these children.