Expanded child tax credit immediately improved life for Ohio children and families
Posted on 09/29/21 by Will Petrik (he/him) in Revenue & Budget
All children, no matter where they live or what they look like, deserve to grow up in a stable home where they can thrive. In too many families, parents and guardians have been laid off during COVID. Many others work in jobs that don’t pay enough to make ends meet. In March, Congress temporarily expanded the child tax credit in the American Rescue Plan, so more families could set their children up for success.
Prior to expansion of the child tax credit, roughly half of all Black and brown children and half of children who live in rural communities received a partial credit or no credit at all. Years of policy choices have held down wages and limited opportunities for many Black and brown and rural families, draining resources from their communities. By making the credit fully refundable, the American Rescue Plan expands opportunity for people who have been left out for too long. But it’s only a temporary fix.
Prior to expansion of the child tax credit, roughly half of all Black and brown children and half of children who live in rural communities received a partial credit or no credit at all. Years of policy choices have held down wages and limited opportunities for many Black and brown and rural families, draining resources from their communities. By making the credit fully refundable, the American Rescue Plan expands opportunity for people who have been left out for too long. But it’s only a temporary fix.
So far, over $1.6 billion has been disbursed to support over 2.1 million children in Ohio since July 15, 2021. The table below shows that the average payment to Ohio families is $437 a month.
These funds allow families to participate more fully in the economy, boosting local businesses. The monthly payments provide parents and caregivers more cash for car repairs, groceries, utilities and other monthly bills. Based on Household Pulse survey data, the Center on Budget and Policy Priorities (CBPP) estimates 84% of households making less than $35,000 annually and 60% of those making $35,000 and more used the credit to pay for basic needs, including food, clothing, rent, mortgage, phone and internet, to support their family.
This spending stimulates the economy, because people who are paid low wages are likely to spend the funds they receive quickly in the local community. For example, people who participate in the food assistance program SNAP spend 80 percent of federal food assistance dollars within two weeks at grocery stores and markets in the local economy.
The monthly direct payments are already making a difference for kids and families. While many Ohioans haven’t fully recovered from the pandemic recession, the cash families with children are getting through the child tax credit is providing more security and stability.
Policy Matters Ohio analyzed data from the Household Pulse survey before and after July 15, the start of the monthly tax credit payments to families. Before the child tax credit payments began, an estimated 1.15 million adults with children reported difficulty paying for basic household expenses in the last week. After the child tax credit payments began, that number was roughly 850,000 adults with children, a decrease of 26%.
Our analysis also indicates that children and families have more food security as a result of the expanded child tax credit. Before July 15, roughly 358,000 adults with children reported “sometimes” or “often” not having enough to eat in the last week. After the payments began, that number declined 36% to an estimated 229,000 adults living with children. We also found adults without children had more insecurity over time. This may be due to Governor DeWine ending the Federal Pandemic Unemployment support at the end of June, but more analysis is needed.
The expanded child tax credit is already helping to provide stability, security and basic human dignity for children and families in Ohio. This is why Congress must make the expansion permanent.
It’s also why we must make sure every eligible family gets signed up for the credit. CBPP estimates 116,500 children in Ohio won’t automatically get it. We support a solution proposed by the Children’s Defense Fund of Ohio to invest $10 million from the American Rescue Plan federal relief dollars to help families sign up for the expanded child tax credit. If Ohio families secured every credit they are entitled to, it would turn a $10 million investment into a minimum of $29 million a month to support these 116,500 children, or a minimum of $349.5 million a year for the children who aren’t automatically enrolled.
Research shows that public spending to improve the health and well-being of thousands of Ohio children is common sense. Living in deep poverty compromises children’s ability to grow and harms their income and health as adults. When families have resources they need to pay for the basics, children benefit in all sorts of ways. They are healthier, get better grades in school, have higher college enrollment rates, and earn more during their lifetime. They are less likely to engage in criminal activity, go to prison, or get involved with the child welfare system. When we as a society prioritize the health and well-being of kids and families, we all benefit. That’s why it's up to all of us to make the expanded child tax credit permanent and make sure families with the lowest wages get the resources they deserve.