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Marsha Mercer column: Should nonworking parents benefit? New child tax credit revives welfare debate
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A Huge Change

Marsha Mercer column: Should nonworking parents benefit? New child tax credit revives welfare debate

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Child Tax Credit

In mid-May, Edmond Cunningham played with Taz. R., 7, at Friends Association child care in Richmond.

It’s Christmas in July. The federal government this week began sending millions of families monthly cash payments through the new, expanded child tax credit.

Through the end of the year, all but the wealthiest families with children will receive $250 a month per child ages 6 to 17 and $300 a month for each child younger than age 6.

Most parents will receive the payments as direct deposits and will take the remainder as a credit when they file their 2021 taxes next year.

“The child tax credit in the American Rescue Plan provides the largest child tax credit ever and historic relief to the most working families ever — and most families will automatically receive monthly payments without having to take any action,” the White House says online.

Families will, that is, if all goes as planned. With 90% of the nation’s 74 million children eligible, this is a massive undertaking.

U.S. Sen. Cory Booker, D-N.J., hailed the expanded tax credit as “the most transformative policy to come out of Washington since FDR that will effectively cut in half child poverty in this country.”

And it is a huge change in the way the country helps not just the poor but most American families. Since President Bill Clinton signed bipartisan welfare reform legislation 25 years ago, most parents have needed to work to receive benefits. The expanded tax credit goes to families even if the parents don’t work or pay taxes.

It’s a temporary program just for 2021, enacted to help families and the economy hurt by the pandemic. President Joe Biden wants to extend it for another five years and congressional Democrats want to make it permanent.

Biden bucks are popular with recipients — and they vote. But are cash payments the best ticket out of poverty? Some experts warn welfare entitlements can be a tender trap that locks families into dependency.

“If the child tax credit expansion is permanently enacted, it would destroy the foundations of welfare reform. This increased cash benefit without work would take more low-income Americans out of the workforce,” Robert Rector, senior research fellow at The Heritage Foundation, a conservative think tank, wrote in an essay.

The advance child tax credit boosts the existing credit from $2,000 per child for working parents.

Payments will be based on a family’s latest tax return with no limit on the number of children covered, although children must be citizens with Social Security or tax identification numbers. Those who don’t pay taxes can sign up online.

Families are eligible for the full advance credit if they have an adjusted gross income of up to $150,000 for a couple, or $112,500 for a single parent or head of household. The expanded credit phases out for parents with higher incomes, but many still are eligible for the regular child tax credit, in effect since 2018 but scheduled to end after 2025.

Examples on the White House website of how the new credit works include “Alex and Casey,” a lawyer and hospital administrator who are married with two children and make $450,000. The high-income couple won’t qualify for the new credit, but they still will receive the regular credit of $2,000 per child.

One could argue that people of such means should not receive any child tax credit, which should be targeted to those most in need. But that point rarely is heard amid the clamor over nonworking parents.

“By next tax season, some households with no working adults will receive more than $10,000 in these payments. No work required. Just free money on top of America’s existing safety net,” U.S. Sen. Marco Rubio, R-Fla., wrote this past month in a RealClearPolitics essay. He favors expanding the credit for working families only.

In 1996, ending “welfare as we know it” was a bipartisan goal and the bipartisan law Clinton signed ended welfare as an entitlement. The law also mandated work for welfare recipients, limited the time someone could receive benefits and cracked down on deadbeat dads, among other things.

Clinton insisted welfare no longer would be a political issue, and politicians would not be able to attack each other or the poor. He was right, but only for a while.

With businesses and Republicans up in arms about unemployment benefits reducing the incentive to work, extending the expanded child tax credit for nonworking parents likely will be a hot political issue well into the 2022 campaign.

Marsha Mercer writes from Washington. Contact her at: marsha.mercer@yahoo.com

© 2021, Marsha Mercer. All rights reserved.

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