The Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) were recently expanded, and the benefits have been significant.
A recent survey showed that food insecurity dropped from 13.7% to 10.2% following the first rounds of the expanded CTC payments, and experts predict that it could eventually cut child poverty in half. Another survey revealed that the expanded CTC has reduced financial anxiety for 56% of families who receive it.
Advocates are working hard to make these life-changing improvements permanent in upcoming recovery legislation. But opponents of these measures threaten to stall progress. With that in mind, we wanted to address some of the most common misconceptions about tax credits. Feel free to reference these in your lobbying and advocacy!
People who receive expanded tax credits still want to work—and they do.
- The Treasury Department has found that 97% of those receiving the Child Tax Credit have a job.
- In reality, the main drivers keeping people from working are unequal access to childcare, poor working conditions, and vaccine access. The idea that federal benefits are keeping people at home has been disputed by Nobel Prize-winning researchers.
- Unlike the Aid to Dependent Families with Children Program, CTC benefits don’t stop when people return to work. This means that individuals receiving benefits have little incentive to not work.
- Some research has shown that when people receive financial assistance, it actually increases their ability to find work. In Stockton, CA, for example, residents who received $500 a month from the city’s guaranteed-income program were more likely to find full-time jobs.
Average taxpayers won’t have to bear the burden of funding these expansions
- The proposed permanent expansions to the CTC and EITC would be funded by increasing taxes for those who make more than $400,000 annually and by changing corporate tax practices to increase fairness. 55 of the largest U.S. corporations, such as Amazon and Netflix, paid zero dollars in federal taxes in 2020 despite bringing in massive profits.
Expanded tax credits can enable a long-term reduction in intergenerational poverty.
- Research has shown that children in families that receive these tax credits perform better in school, are more likely to go to college, and are predicted to earn more as adults. Research also shows that these tax credits help bring people into the workforce.
The expanded tax credits allow families to spend more time together and can improve family outcomes.
- By removing some financial stress, such as the need to take on a second job, expanded tax credits can enable more family bonding and enrichment time.
The CTC and EITC expansions will expire soon if Congress fails to act. Urge your member of Congress to make these transformative tax credit expansions in recovery legislation permanent.