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.)

 
Document Resources:
  pdf PDF of full report (3pp.)
  E-mail to a friend
  Print
Report Categories:
  All Reports by Date
  Federal Tax Policy
CBPP Services:
  E-mail Notifications
  RSS Alerts