Updated October 3, 2008
CHILD TAX CREDIT EXPANSION PASSED BY CONGRESS
WILL HELP 13 MILLION CHILDREN
Nursing Home Aides, Cooks, Pre-School Teachers,
And Construction Workers Would Get a Boost
by Sharon Parrott, Arloc Sherman, Chye-Ching Huang
A Child Tax Credit expansion passed by both the House and Senate will benefit 13 million children — 2.9 million who will become newly eligible for the benefit and 10.1 million who will see their credit increased due to this provision, according to the Tax Policy Center. These 13 million children come from families with parents who work in such jobs as nursing home aides, cook, pre-school teachers, and construction workers.
This provision was among the tax measures included in the financial rescue legislation passed by the Congress this week. The President has pledged to sign the legislation.
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 credit 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. Specifically, the provision would temporarily expand the credit by lowering — for tax year 2008 — the earnings threshold that families must meet to qualify for the refundable portion of the credit.[1] Families would qualify for a refundable credit 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.
Who are the families that would benefit? Census data[2] 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 Child Tax Credit 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 Child Tax Credit expansion.
TABLE 1:
Number of Children Who Will Benefit From the Child Tax Credit Provision Passed By Congress |
State |
Children Newly Eligible for the Credit |
Children Receiving a Larger Credit |
Alabama |
52,711 |
182,594 |
Alaska |
5,271 |
18,259 |
Arizona |
77,017 |
266,760 |
Arkansas |
33,677 |
116,657 |
California |
458,589 |
1,588,565 |
Colorado |
40,705 |
141,003 |
Connecticut |
19,620 |
67,965 |
Delaware |
6,443 |
22,317 |
D.C. |
4,685 |
16,231 |
Florida |
169,555 |
587,343 |
Georgia |
96,638 |
334,755 |
Hawaii |
11,128 |
38,548 |
Idaho |
18,742 |
64,922 |
Illinois |
114,794 |
397,648 |
Indiana |
58,568 |
202,882 |
Iowa |
22,256 |
77,095 |
Kansas |
27,527 |
95,354 |
Kentucky |
37,191 |
128,830 |
Louisiana |
50,662 |
175,493 |
Maine |
8,492 |
29,418 |
Maryland |
35,141 |
121,729 |
Massachusetts |
32,213 |
111,585 |
Michigan |
88,145 |
305,337 |
Minnesota |
34,848 |
120,715 |
Mississippi |
36,898 |
127,816 |
Missouri |
55,347 |
191,723 |
Montana |
8,200 |
28,403 |
Nebraska |
14,935 |
51,735 |
Nevada |
26,649 |
92,311 |
New Hampshire |
4,685 |
16,231 |
New Jersey |
58,568 |
202,882 |
New Mexico |
27,234 |
94,340 |
New York |
161,355 |
558,940 |
North Carolina |
96,345 |
333,741 |
North Dakota |
4,393 |
15,216 |
Ohio |
94,588 |
327,654 |
Oklahoma |
40,119 |
138,974 |
Oregon |
34,848 |
120,715 |
Pennsylvania |
91,659 |
317,510 |
Rhode Island |
8,492 |
29,418 |
South Carolina |
45,390 |
157,233 |
South Dakota |
7,028 |
24,346 |
Tennessee |
60,032 |
207,954 |
Texas |
344,967 |
1,194,974 |
Utah |
31,041 |
107,527 |
Vermont |
4,685 |
16,231 |
Virginia |
50,954 |
176,507 |
Washington |
52,711 |
182,594 |
West Virginia |
17,863 |
61,879 |
Wisconsin |
40,412 |
139,988 |
Wyoming |
4,393 |
15,216 |
United States |
2,928,412 |
10,144,093 |
Source: Tax Policy Center national estimate, distributed by state based on CBPP analysis of the 2005 American Community Survey |
End Notes:
[1] Because the provision approved by the Senate Finance Committee would lower the refundability threshold for the Child Tax Credit for one year only, it does not address the issue of de-indexing the threshold from inflation. (The income threshold at which the credit becomes available currently increases each year with inflation, even when — as in recent years — the earnings of low-wage workers do not keep pace with inflation.) For further discussion of the inflation-indexing issue, and a more detailed discussion of the need to improve the refundability of the Child Tax Credit, see Aviva Aron-Dine, “Improving the Refundable Child Tax Credit,” Center on Budget and Policy Priorities, revised May 19, 2008.
[2] 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 Child Tax Credit 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.) |