Expired child tax credits going home

CHARLESTON, W.Va. (AP)

For the first time in half a year, Friday families will not send monthly payments from child tax credit – a show that was intended to be part of President Joe Biden’s legacy but instead appeared as a flash point than anyone who deserves government support.

Retiree Andy Roberts, from St. Albans, West Virginia, relied on checks to help support two young grandchildren he and his wife adopted because their biological parents were recovering from a drug addiction.

Robertses currently costs $550 a month. That money helped pay for the Girl Scouts, ballet and acting lessons, and children’s shoes, which Roberts noted were more expensive than adult shoes. The tax credit is a “gift from heaven,” he said.

Roberts said of losing payments: “It will make you tighten your belt, if you have anything to tighten.

Monthly tax credits that are part of Biden’s $1.9 trillion coronavirus relief package – and the president has proposed extending them for another year as part of a separate measure focusing on economic and social programs.

But Democracy Senator Joe Manchin, from West Virginia, Roberts’ home state, opposed the credit expansion out of concern that the money would discourage people from working and that any additional federal spending would fuel inflation which climbed to a near 40-year high.

According to IRS data, 305,000 West Virginia children benefited from the extended credit last month.

Manchin’s opposition in the equally divided Senate skewed Biden’s social spending package and caused the extended tax credits to expire in the middle of each month in January. This is reducing family income at a time when everyone is struggling with higher prices.

However, families only receive half of the 2021 monthly credit, and the other half will be received when they pay taxes in the coming months. Credit size will be cut in 2022, with full payments only available to families with enough income to owe taxes, a policy option that would limit benefits to the poorest households . And the credits for 2022 will only come when people pay their taxes early next year.

West Virginia families interviewed by the Associated Press have highlighted how their gas and grocery bills have increased and said they will need to make a living with less financial hardship than a few. last month.

“You have to learn to adapt,” says Roberts, who has worked as an auto dealer for five decades. “You never really dreamed that things would suddenly explode. You go down and get a package of hamburgers and it’s $7-8 a pound. ”

By the Biden administration’s calculations, the extended child tax credit and monthly payments were a policy hit, raking in $93 billion over six months. More than 36 million families received payments in December. The payments are $300 monthly for each child five years old and younger, and $250 monthly for children six to 17 years old.

The Treasury Department declined to address questions about the expiration of the extended child tax credit, which has become a politically sensitive issue under Biden’s nearly $2 trillion economic package that has been scrapped. stagnation in the Senate.

Manchin has supported some form of job request for payees, out of concern that the government’s automated aid could drive people out of work. His first objection, however, in a written statement last month, dropped that issue when he expressed concern about inflation and that a one-year extension obscures the true cost of a Tax credits can become permanent.

“My Democratic colleagues in Washington are determined to dramatically reshape our society in a way that makes our country even more vulnerable to the threats we face. face to face,” Manchin said. He added that he was worried about inflation and the size of the national debt.

The Surveyed by the Census Bureau recipient spending patterns in September and October. Nearly a third use this credit to pay for school expenses, while about 25% of families with young children use this credit to take care of children. About 40% of recipients said they mainly rely on money to pay off debt.

There are distinct benefits in terms of improving outcomes for poor children, who previously were unable to access full tax credits because their incomes were too low. An analysis of Urban Institute estimates that the credit expansion developed by the Biden administration would cut child poverty by 40%.

The tax credits do not cause the workforce to retreat immediately, as some lawmakers have feared. The Bureau of Labor Statistics reports that the percentage of people in employment increased from 58% last month when monthly payments began to 59.5% last month. A similar trend is observed in West Virginia, where the employment-to-population ratio has risen to pre-pandemic levels of 52.9%.

There is an academic debate about whether credit can prevent employment in the long run, with most studies suggesting that the impact would be statistically insignificant.

Scholars who study tax credits are torn about how a permanent program would affect the economy and child welfare.

Katherine Michelmore, associate professor of public policy at the University of Michigan, and two other researchers estimate that about 350,000 parents will leave the workforce, a negligible number in an economy of about 150 million job.

Michelmore said the long-term impact of the perpetual tax credit would have a positive effect on the economy, as children who grow up in higher-income families “tend to do better in school, they have more likely to graduate from high school. It may be 50 years from now but there will be more cost savings in the future. “

One of the key questions for policymakers is whether bureaucracies or parents are better at spending money on children. Manchin has proposed a 10-year, funded version of Biden’s economic proposal that would remove the focus on the child tax credit and instead fund programs like preschool, to avoid sending money. directly to families.

“It’s an ethical question of whether you trust families to make their own decisions,” says Michelmore.

Hairdresser Chelsea Woody is a single mother from Charleston, West Virginia who works six days a week for a living. Extended child tax credit payments helped pay for her son’s babysitting, as well as letting her shop for his clothes.

“It really helps a lot. It’s an extra cushion, instead of me worrying about how to pay the bill or if anything happens,” Woody said as she loaded groceries into her car. “It helps a lot of people. It helps working families because we struggle the most. I’m hardly at home with my kids because I work all the time. “

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