Fact of the Week: The Most Effective Anti-Poverty Programs for Children

|

October 22, 2014

Children remain the age group most disproportionately poor in our country – roughly one out of five children in the U.S. is poor – and the statistics are far worse for children of color and children in cities, where the numbers are closer to one out of three. We know that children who grow up poor are more likely to suffer from poor health, developmental delays, behavioral problems, and lower achievement in school. They are also more likely to be unemployed as adults.
All of these statistics should make it painfully clear that we must protect and strengthen proven anti-poverty programs for our nation’s youth. Together, the Earned Income Tax Credit and Child Tax Credit lifted 9.4 million people – including 5 million children – out of poverty in 2013, making them the most effective anti-poverty programs for children. And 8.1 million more children were less poor because of these credits. Children from families that benefit from the EITC do better in school and end up working and earning more as adults.

CBPP Earned Income Tax Credit and Child Tax Credit graph

The Center on Budget and Policy Priorities (CBPP) found that the Earned Income Tax Credit (EITC) lifted 6.2 million people, including 3.2 million children, out of poverty in 2013, while the Child Tax Credit (CTC) did the same for 3.1 million people, including 1.7 million children. The combined effect of the two credits lifted additional people above the federal poverty line. These numbers differ slightly from the numbers released by the Census Bureau last week (and discussed in last week’s Fact of the Week) because CBPP is taking into account the non-refundable portion of the Child Tax Credit as well, which the Census Bureau did not.

During the lame duck session in November and December, Congress may work to extend dozens of temporary tax cuts known as “extenders” that have expired or are scheduled to expire. These extenders overwhelmingly benefit corporations at a huge cost to the public and aren’t paid for by increasing revenues from other fair sources. Yet some in Congress think it’s a good idea to make these cuts permanent so they won’t ever expire again (check our latest Human Needs Report for a more detailed look at these extenders and the many reasons why we think they’re a bad idea).

Continuing tax breaks for business that don’t do much for the economy should not be Congress’ top priority. But ensuring that critical improvements made to the EITC and CTC in 2009 are made permanent should be. These key provisions now set to expire in 2017 include relief from the ‘marriage penalty’ in the EITC and making sure that families with low earnings (say, the minimum wage) do not lose most or all of their Child Tax Credit. If these provisions are allowed to expire, CBPP notes that 7.7 million children will fall into or deeper into poverty. Anyone who cares about children, families, or our future should tell Congress that acting on the business tax breaks without protecting the CTC and EITC would be (1) shameful and (2) harmful to our economic recovery.

Beyond making permanent the improvements to the EITC and CTC currently in place, a new report from the Center for American Progress highlights a number of suggestions for additional ways to improve the credits to help more low-income workers, both those with and without children. These include expanding the EITC for workers without qualifying children (workers without children or whose children don’t live with them); making the CTC fully refundable and indexing it to inflation; making it easier and more profitable for recipients to save a portion of their refund; making a partial early refund of the EITC available; and making it more affordable for EITC recipients to access education and training programs. The credits and at least some of the proposed improvements have bipartisan support, as Poverty and Policy blogger Kathryn Baer noted.

Given the state of child poverty in our country (hint: it’s deplorable), we should be doing everything we can to support programs that keep our children from growing up poor. Doing so won’t only be better for them, it’ll be better for our nation. If you could send your wish list to Congress on addressing child poverty, what would be on it? We welcome your comments below.

child poverty
Child Tax Credit
Earned Income Tax Credit
Fact of the Week
tax policy