Senior Director of Federal Tax Policy
Some 17.3 percent of children under age 6 were poor last year, our analysis of Census data released yesterday shows — notably higher than older children or adults (see chart). (Our figures are based on the Supplemental Poverty Measure, which counts both cash and non-cash government benefits.) That the nation’s poorest people are babies, toddlers, and kindergarteners shouldn’t be acceptable — and policymakers can help by boosting the Child Tax Credit (CTC) for very young poor children, many of whom receive little or nothing from the credit now.
Beyond the short-term benefits of reducing child poverty, boosting the CTC for the poorest young children may reduce various poverty-related risks that can limit young children’s brain development, with long-term consequences. As a report from Harvard’s Center on the Developing Child explains, the early years of life are a “period of both great opportunity and great vulnerability.” Research suggests that raising families’ incomes can result in healthier, better educated children with greater earning power as adults:
Under current rules, families with incomes up to $3,000 are ineligible for the CTC, and the credit phases in slowly for families with incomes above that threshold. Families with two children don’t receive the full credit of $1,000 per child until their earnings reach $16,333. As a result, children in the poorest working families get no CTC and many other children in deep poverty, with incomes below half of the poverty line, get only a partial tax credit.
By making the full CTC available to all low-income children — in tax parlance, making the credit “fully refundable” — policymakers could boost young children’s potential to succeed in life.