3.7 Million More Impoverished Children Without Child Tax Credit: Study

The discontinuation of the nationwide child tax credits led to an increase of 3.7 million children in poverty across the country—a 41 percent increase between December 2021 and January 2022, according to a new study.

Child poverty rates rose from 12.1 percent in December to 17 percent last month, according to the study published by the Columbia University Center on Poverty and Social Policy. The study's co-authors said that 17 percent represents the highest rate since the end of the 2020 calendar year.

Child Poverty
The discontinuation of nationwide child tax credits led to an increase of 3.7 million children in poverty across the country—a 41 percent increase from December 2021 to January 2022, according to a new study published by the Columbia University Center on Poverty and Social Policy. "[W]hen something like this is doing so much to help families...when it is removed, it creates a real cliff," said Megan Curran, policy director for the Columbia University Center on Poverty and Social Policy. iStock/Getty

Megan Curran, policy director for the Columbia University Center on Poverty and Social Policy, told Newsweek that she and her colleagues, Sophie Collyer and Zachary Parolin, began looking at the impact of child tax credits in a monthly framework since the beginning of 2020—or when the COVID-19 pandemic was first universally recognized.

"By mid-2021 most of those other pieces [stimulus checks and expanded unemployment benefits] had expired and the child tax credits was really the central piece of ongoing pandemic relief, particularly for families with children," Curran told Newsweek.

The study was conducted using the Supplemental Poverty Measure, which analyzes and tracks poverty on a monthly basis amid varying economic circumstances that coincide with federal policies and the ongoing pandemic.

Curran said the system takes into account household incomes and taxes plus essential costs, such as money used for commuting or healthcare. Averages vary nationally due to housing costs, though if the average family of two adults and two children in an average-cost city is below $28,000, that is defined as being in poverty.

Data showed that the child tax credits kept 3-4 million children out of poverty when they were distributed by the Internal Revenue Service between July and December 2021, she said. Payments made were worth up to $250 per child for those ages 6 to 17, while children under 6 received up to $300 each.

Month-by-month poverty reduction rates throughout the duration of the child tax credit payments are as follows: 3 million children in July; 3.5 million children in August; 3.4 million children in September; 3.6 million children in October; 3.8 million children in November; and 3.7 million children in December.

Since over 61 million children in over 36 million households were impacted, Curran said she was not surprised that the number of impoverished children drastically increased last month.

"Everyone who was kind of paying attention to the good things the child tax credits had done the past six months were really concerned when the payments were ending. [W]hen something like this is doing so much to help families...when it is removed, it creates a real cliff," she said.

In December, at the tail end of the child tax credits being available for children and families, the Columbia University Center on Poverty and Social Justice published its findings from the nearly six months' worth of data since the credits were enacted.

They found that monthly payments acted as buffers during the ongoing pandemic; that they reduced child poverty; and that families spent their credits on food and other basic needs, including bills, children's clothing, healthcare, childcare and saving for emergencies.

"The bottom line is that we see that policy matters and good policy works," Curran said, mentioning how child tax credits were as important as extending unemployment benefits or issuing stimulus checks to compensate for losses in the labor market.

The first payment in July 2021, for example, kept 3 million children out of poverty and the IRS became more adept at reaching children and families throughout the remaining months.

"The sheer magnitude of those poverty reductions when just one payment comes out...shows the immense power this program had, and the need these families with kids had," she said.

Data also showed that no evidence existed indicating that monthly payments increased unemployment. Also, racial equity was impacted as the authors' compiled data showed that Latino and Black children experienced the largest percentage-point increases in poverty in January, at 7.1 percentage points and 5.9 percentage points, respectively.

Curran said the disproportionate effect on those communities showed "real policy lessons to take away" from the six-month issuance of the credits. Previous versions of the child tax credits left out one-third of all kids due to how it was structured, including one out of every two Black and Latino children.

"Just by virtue that these kids were now eligible for a credit that they didn't use to be, they can reap huge benefits from it," Curran said.

A silver lining of economic relief has been the continuation of the Supplemental Nutrition Assistance Program (SNAP) emergency allotments still in place in most states, the authors said. It has kept about 1.6 million children from poverty. If the SNAP benefits were discontinued, the authors said the January 2022 poverty rate would have been 11 percent higher.

Since the child tax credits were doled out for only a six-month period and "considered an advance of half the value of the annual credit, families can get more money when they file a federal tax return this year and receive either a maximum of $1,800 for every child under 6 years or a maximum of $1,500 for every child between the ages of 6 and 17 depending on income.

But as Curran noted, that is only if families are aware that they can receive more money. She said there is still time for a continuation of the child tax credits to be agreed upon and go into effect in 2022.

While SNAP maintains a critical role in poverty reduction, Curran said that child tax credits were critical in helping families be flexible with their particular needs, filling in the gaps in their own personal budgets.

As of now, there is no federal plan to extend the credits. Some politicians, including Senator Joe Manchin of West Virginia, have claimed that child tax credits negatively impact the national workforce—which governmental data shows is false.

"There is a real case to be made for a child tax credit to be made permanent, or at least continued for the next year or so," Curran said, alluding to school closures and an unstable economy. "We're not out of the pandemic yet. [H]opefully, the people who are making decisions about the future of the child tax credit will be able to recognize the important work it has done."