Since July, more than 36 million households across the country have received a payment from the federal government on the 15th of the month, up to $300 per child, from the Child Tax Credit.
But tomorrow, January 15, these payments will not arrive.
They were part of a year-long expansion of the child tax credit that also increased the amount of the credit and widened eligibility for poorer families. So far, Congress has taken no action to extend these changes.
For many low-to-middle-income parents, like Jessica Morrison, the monthly payments have been important.
Before the $550 from the government began reliably arriving in her bank account each month, she sometimes had to put supplies on credit.
“Also unexpected expenses, like a car repair, a plumbing problem, or something around the house that needed to be done,” she said.
Morrison is a social worker for the state of Pennsylvania, her husband drives for Uber and Lyft, and they have two children, ages 2 and 7.
“There were definitely months where we were living paycheck to paycheck, just because of a bad luck streak, where it would take us forever to get back on our feet,” she said.
The monthly child tax credit payments were a game changer.
“I can honestly say that, like, I didn’t feel like I was living paycheck to paycheck,” Morrison said. “I definitely felt a lot more solid on my feet when it came to our family’s finances.”
It gave them enough leeway to be able to cover those unexpected expenses, and for the first time, they also felt they could save $65 a month to send their 7-year-old daughter to dance lessons.
“It’s something she’s wanted to do for a long time,” Morrison said. “It’s extracurricular, she can exercise and she has made new friends. And that’s something that’s really just kind of the icing on the cake. »
It’s not a necessity, but seeing how much her daughter gets out of dancing “has been amazing,” she said.
The tax credit also allowed Nura Moshtael, a single mother from Atlanta, to do things for her son that she wouldn’t otherwise. He’s 13 and has Down syndrome, and “he’s always loved going out to cafes and eating out,” she said.
But other needs tend to take up a good part of his salary.
“My son, because he has special needs, he is taking speech therapy and occupational therapy, and these are additional expenses that we have had since he was born,” said Moshtael, who works as a server in a restaurant. .
The $250 she receives each month has allowed her to budget for occasional meals and field trips for her son, whom she homeschools.
There is preliminary evidence that most families spent their child tax credit payments much like Moshtael and Morrison: on food, household needs and enrichment for their children. And it also lines up with research on how parents in other countries use child benefits, according to INSEAD economics professor Mark Stabile.
“They spend more money on education, they spend more money on food at home, they spend more money on transportation, they end up spending less money on alcohol and tobacco. “, did he declare.
Many countries pay monthly cash payments to parents: Germany, UK, Ireland, Sweden, Netherlands.
“The United States has really been an exception in not providing this form of regular support for children,” said Megan Curran, policy director at Columbia University’s Center on Poverty and Social Policy.
“It’s a very common feature of how governments recognize the cost of raising children and also recognize that it benefits society as a whole, to help parents raise their children in a healthy and well-supported way. .”
According to Curran and other experts, the best place to look for an idea of how an expanded child tax credit might work in the long term in the United States is Canada.
“There are several reasons why Canada is sort of the closest comparison,” said Hilary Hoynes, a professor of economics and public policy at the University of California, Berkeley.
For one, the amount and structure of the Canada Child Benefit is similar to the 2021 Child Tax Credit here.
And second, Hoynes said, the social safety net in Canada — aside from its health care system — is more like the social safety net in the United States than it is in many European countries.
“Many other wealthy countries that have child benefits also have much greater access to other types of child benefits, such as lower-cost childcare and pre-school education, as well as family leave and other types of allowances,” she said.
Even without that, studies show Canada’s poverty rate dropped 20% in two years, after its child benefits were increased in 2016. And the payments have contributed to what Hoynes calls “a remarkably broad improvement.” family results.
“Children are more likely to go to school, parents are more likely to report that their children are healthier, parents are more likely to report that the family is able to meet their food needs”, she said.
Other programs in the United States that provide financial support for parents, such as the Earned Income Tax Credit and SNAP, or food assistance, have had similar effects.
“There is a very large set of results that show that public spending on families with children yields incredible returns to society, relative to the costs of those payments,” Hoynes said.