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New study details impact of expanded child tax credit

CHARLESTON, W.Va. — Last year’s child tax credit expansion provided families with a revenue source for routine expenses and essential items as well as funding for emergencies and addressing debt, according to a recent report.

The Brookings Institution’s Global Economy and Development program released a study detailing the effects of the expanded child tax credit earlier this month. The authors noted common uses for the child tax credit and how the program impacted financial security.

Families were eligible to receive up to $300 per child until last December when Congress allowed the initiative to expire. Lawmakers approved the child tax credit expansion in March 2021 as part of the $1.9 trillion American Rescue Plan.

According to the report’s authors, 70% of families who received the child tax credit used the money on routine expenses such as housing and utilities. Other common uses include clothing and other essential items (58%), food (56%), emergencies (49%), and paying off debt (42%).

The authors also note no significant changes in employment between households because of the child tax credit during the six months that payments were issued.

“We tracked employment trends for both CTC-eligible and ineligible households, and we could find no statistically significant differences in the employment trend,” co-principal investigator Leah Hamilton said.

“Our study and several others like it using various data sets have found no indication there was any disincentive to work.”

Hamilton, who is also a professor of social work at Appalachian State University, noted eligible households were 1.3 times more likely to start learning a new professional skill compared to homes that did not receive the tax credit.

“That means returning to school, getting certificates and investing in the long-term financial growth of their family,” she said.

U.S. Sen. Joe Manchin, D-W.Va., has shared opposition toward extending the child tax credit, telling Business Insider in January there needs to be a work requirement with the program. Hamilton said there is no proof that such a requirement would be beneficial.

“We can’t find any evidence that people would use the credit to reduce their work. If anything, it is helping people work more by allowing them to afford child care,” she said. “Some might argue that might be an unnecessary bureaucratic hurdle that’s solving a problem that doesn’t exist, but creating hurdles for families that really do need this credit right now to put food on the table, pay bills, keep the lights on, and all of the really essential things that many families used it on.”

The West Virginia Center on Budget and Policy previously reported 346,000 West Virginia children lived in households that received payments.





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