Lessons from the Expanded Child Tax Credit Can Strengthen Other Safety Net Programs

The expansion of the Child Tax Credit is a bold action to reduce child poverty, built on a solid foundation of research evidence. As of July 2021, families of nearly 60 million eligible children started receiving their first advanced payment from the expanded Child Tax Credit, which increased the dollar amount of the credit, made it payable on a monthly basis, and extended eligibility to families who previously earned too little to qualify for the full credit. Unfortunately, these changes are set to expire at the end of the calendar year unless Congress either makes them a permanent feature of the tax code or extends the credit beyond 2021.

As policymakers consider making permanent the expansion of the Child Tax Credit, researchers must support their efforts to track the credit’s reach and impact, paying close attention to which aspects of its structure and administration are helpful and which create or maintain barriers to families’ access. Extending the principles that informed the expansion and incorporating the lessons learned from its rollout will allow policymakers to improve the reach and effectiveness of the tax credit, as well as a host of other safety net programs. Here are some examples of how these principles could be extended:

Ensure that programs designed to support economic stability and well-being are accessible to all households, including those most in need.

How cash benefits are paid affects how many, and which, families benefit from them. Benefits paid through the tax system are not typically designed to reach parents whose incomes are too low to file tax returns. These families are often among the poorest and include those living in deep poverty, a condition that is particularly detrimental for children. Tax-based benefits may also be difficult to access for families without access to internet, financial services, stable housing, or accurate sources of information about the tax process.

In the case of the Child Tax Credit, the IRS has established a claims portal for non-filers. Researchers should use the upcoming months of the expanded Child Tax Credit to assess whether this is an effective mechanism, which families the policy is not reaching, and how to improve policy moving forward. And let’s apply those lessons to other benefits paid through the tax system—most notably the Earned Income Tax Credit.

Eliminate barriers to Latino children’s access to benefits.

Child Trends reported in June 2021 that there were 1.2 million more children in poverty in 2020 than in 2019. More than half of these children (about 700,000) were Latino. Indeed, Latino children represent the largest number of children living in poverty among all races and ethnicities.

In some cases, households are ineligible for benefits because at least one member is an unauthorized immigrant. While more than 90 percent of Latino children are U.S.-born citizens, one in four has a parent who is an unauthorized immigrant. For these families, and for many safety net programs, the legal status of adults determines eligibility rather than the needs of their children.

In a fundamental restructuring of how eligibility for benefits is determined, the expanded Child Tax Credit uses a child’s legal status—rather than their parent’s—as the basis for eligibility. Extending this child-focused frame to other safety net programs would help support additional low-income families by providing access to food support, housing assistance, and an additional tax credit for low-income working parents.

Apply an anti-racism lens to new and existing policies to promote economic well-being for all families.

Limits on benefit eligibility and access illustrate and reinforce the role of structural racism in creating and sustaining higher rates of multi-generational poverty among people of color. Whether the historic segregation in housing, education, and other pathways to acquiring wealth; the legacy of forcible removal of Indigenous people from ancestral lands; or the denial of benefits to people based on their legal status, public policies at all levels of government have denied families of color the same opportunities as White families to protect and promote their children’s well-being.

Given this history, it will be critical over the coming months to examine whether receipt of the Child Tax Credit varies by race, ethnicity, or immigrant status—and if so, to understand and address why. This will not only help us better assess the reach of the credit, but will also pave the way for continued efforts to reduce barriers to participation in other safety net programs, such as SNAP and EITC, that play a critical role in buffering against the effects of poverty on children’s development.

Recent Research from Child Trends on Poverty

Four in 10 Latino and Black households with children lacked confidence that they can make their next housing payment, one year into the COVID-19 pandemic. Housing insecurity is associated with adverse child and adult outcomes, including poor child health and development, poor maternal health, and food insecurity.