Common Good Iowa

Hardship for 136,000 Iowa kids in Child Tax Credit lapse

November 15, 2022

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Hardship for 136,000 Iowa kids in Child Tax Credit lapse

Congressional action in Lame Duck session needed to restore expansion

DES MOINES, Iowa — Congress must act yet this year to prevent greater hardship for the 136,000 Iowa children who lost out with the lapse of a recent expansion of the Child Tax Credit, according to a new report from the Center on Budget and Policy Priorities (CBPP).

A temporary expansion of the Child Tax Credit (CTC) last year gave millions of low-income families with kids a boost and drove down child poverty to a record low. But Congress this year let the CTC expansion lapse. If it fails to act now, 19 million children across the country risk being pushed into poverty or facing greater hardship.

Children from Black, Latino and American Indian families — who face significant barriers to opportunity due to historic and present-day discrimination — are disproportionately put at risk. In Iowa, among the 136,000 children who stand to lose out if Congress fails to act, 24,000 are Latino and 20,000 are Black, far above their representation in the population. Among the other children, 78,000 children are white and 3,000 American Indian.

Common Good Iowa is urging the Iowa congressional delegation to make children and families the priority in an end-of-year spending package — despite the push of special interests for new tax breaks for profitable corporations.

“There is no room for tax breaks for wealthy corporations without first expanding the Child Tax Credit,” said Mike Owen, deputy director of the nonpartisan Common Good Iowa. “Corporations have profited from rising costs. They don’t need help, but low-income families do. Put families first.”

The Child Tax Credit is proven to help families with children by providing more money in their pocket when they file their taxes. That’s more money to help meet rising costs and cover basics, such as housing, food, medicine, clothes, and school supplies.

But a flaw in the credit’s design leaves kids in the lowest-income families behind by giving them only a partial credit or no credit at all, even as children in wealthier families receive the full benefit. By correcting this flaw, the American Rescue Plan temporarily lifted millions of the poorest kids out of poverty.

Poverty and the hardships that come with it, such as unstable housing and hunger, can take a heavy toll on children, such as lower levels of educational attainment and poorer health and reduced incomes in adulthood.

“The success of the 2021 Child Tax Credit expansion showed us that high child poverty rates are a policy choice, not an inevitability,” said Chuck Marr, CBPP’s Vice President for Federal Tax Policy and author the report. “All kids deserve a fair shot at success, no matter their race or parents’ income. The choice before Congress this year is simple: They can act, or they can see millions of children fall back into poverty.”


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