Child tax credit checks: Will they become permanent?

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(NEXSTAR) — The parents of an estimated 60 million American children began receiving child tax credit payments from the IRS this week in a move expected to lift millions of families above the poverty baseline for the remainder of 2021.

As many parents know by now, the payments differ from stimulus checks in that they are not completely new funds, but rather an advanced payment on the Child Tax Credit parents already were deducting from their taxes at filing time.

The total value of the credit was beefed up for 2021 as part of the Biden administration’s American Rescue Plan. This year, parents are getting half of the funds in advance and the rest when filing is done next spring. That means the monthly check payments will run out at the start of 2022.

A growing number of lawmakers are coming out in favor of making the monthly cash infusions a long-term benefit for parents, but there is also some fierce opposition to add new spending in the wake of costly pandemic rescue efforts and fears of inflation.

Here’s where the debate stands through mid-July:

Why do some want to make the CTC payments permanent?

The expanded child tax credits are fully refundable, meaning parents with no annual income tax burden can still get the cash infusion, creating a reliable income stream for extremely low-income families. According to research from Columbia University’s Center on Poverty and Social Policy, the monthly checks will lift 45% of impoverished children above the poverty line.

“It’s a very important program that will do a huge amount to relieve child poverty, which has been a tremendously important problem in the United States,” Treasury Secretary Janet Yellen told NPR this week.

Research from 2011 suggests such tax credit infusions can help school testing averages for lower-income students, potentially providing better opportunities for scholastic and career success while at the same time putting making food and other necessities more attainable.

What’s the argument against continued child tax credit payments?

Permanent child tax credits enjoy some bipartisan support, and the idea actually has roots in the Republican Nixon administration. But a permanent credit does have some detractors, mostly from the center and right of the political spectrum.

The most obvious concern is the increased cost. Some lawmakers have voiced support for a package that includes permanent credits, as long as they are paid for. That could mean raising taxes, which could create political problems. The program costs an estimated $100 billion annually, according to the Wall Street Journal.

Others believe the payments – which some have described as social security for children – simply solve a short-term poverty problem while disincentivizing parents from advancing in the workplace. Many social programs – including the current CTC checks – offer lower benefits to higher-income earners. Critics say parents could become less inclined to pursue career advancement if it costs them such benefits.

Where do efforts to extend the payments beyond 2021 stand?

The Biden administration is pushing to extend the credits through 2025 and is on record as hoping to make them permanent by increasing taxes on people earning over $400,000 annually. Republicans, including Senators Marco Rubio (Florida) and Mike Lee (Utah), have previously proposed their own family support plans, which include such credits being tied to employment. Senator Mitt Romney (Utah) has also lead a charge for a simplified child benefit.

The monthly checks are expected to be popular with voters and a battle for what the extension looks like could put Republicans in a difficult position on a broadly popular program.

“When it’s up for renewal, Republicans will be in the awkward position of opposing payments to families delivered through a credit that they pioneered, and championed as recently as 2017,” Samuel Hammond, director of poverty and welfare policy at the Niskanen Center, told the Associated Press earlier this year. “The alternative is to rally behind some Plan B.”

Though many Republicans would entertain an extension on their terms, their priorities may not end up factoring into the final proposal.

Reporting this week suggests the Democrats are pursuing extending the credits through a massive $3.5 trillion budget reconciliation proposal, a move that would allow the package to be passed without GOP support in the Senate.

While that move would reduce the senate vote threshold from 60 to 50 votes, it will also link the program with less popular elements of the Biden budget agenda. If that package proves difficult to pass, the Democrats may have to look again at breaking out the credit extension in a bill that is palatable for both Democrats and Republicans.

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