Congress Must Reject the Expanded Child Tax Credit
- BY Sarah Coffey
A provision of the American Rescue Plan Act (ARPA) of 2021 was the expansion of the Child Tax Credit into monthly cash payments, as opposed to a year-end, lump-sum credit.
It expired at the end of 2021, but the Biden administration wants to reinstate this expanded Child Tax Credit in the coming weeks. Congress must emphatically reject efforts to reinstate the expanded Child Tax Credit. Expanding it will sever the connection between cash benefits and work, weaken our struggling economy, and hook another generation of American families on welfare.
The expanded Child Tax Credit is essentially a new welfare program.
Historically, the Child Tax Credit has been a year-end credit, which required recipients to report minimum earnings and show they were working.
The Biden administration wants to reinstate monthly cash payments and eliminate work requirements. This expanded Child Tax Credit more closely resembles a welfare program than a tax credit because it severs the connection between the cash benefit and work.
By ending the work requirement, the expanded Child Tax Credit could make the labor shortage even worse.
The administration intends for the expanded credit to be completely refundable, meaning recipients need not work to be eligible. With no incentive to work, the expanded Child Tax Credit will inevitably shift at least 1.5 million people away from the workforce.
There are already three million individuals missing from the workforce compared to pre-pandemic rates and expanding the credit will only make the problem worse. Businesses are struggling to remain staffed, and with stacked benefits on top of the expanded credit, we can’t afford more incentives for people to stay home rather than work.
Expanding the Child Tax Credit will make inflation worse.
Expanding the Child Tax Credit would exacerbate the already serious problem of out-of-control government spending, a primary driver of inflation. It’s estimated that expanding the Child Tax Credit would cost taxpayers $1.6 trillion over the next decade.
At a time when many Americans are struggling to feed their families and make ends meet during this prolonged period of inflation, the Biden administration is proposing to flood the economy with even higher inflation and pay people not to work. It’s backwards and it’s wrong.
A large portion of the money will be delivered to individuals who immigrated illegally.
What’s worse is there’s virtually no accountability for this spending, as the Biden administration plans to waive requiring a Social Security number to enroll all while increasing benefit amounts between 50 and 80 percent depending on a child’s age.
The Biden administration’s plan to expand the Child Tax Credit would also eliminate Social Security number requirements, funneling more taxpayer funds to individuals who immigrated illegally. And with illegal crossings along the southern border estimated to hit 10,000 per day, the blank check from the Biden administration will only grow bigger.
And it won’t help families.
In addition to the already bleak consequences, expanding the Child Tax Credit could put families in the crosshairs of the IRS. The government calculates monthly benefit payments on assumptions, not real data—meaning there’s a high chance for mistakes and overpayments.
There’s a real concern that thousands of families would be expected to pay back overpayments come tax time, adding yet another financial burden.
Locking families into long-term government dependence does little to reduce poverty. In fact, the Biden administration’s plan would have no effect on deep poverty and is likely to lead to long-term negative consequences as children watch their parents leave the workforce.
Congress must unequivocally reject expanding the Child Tax Credit.
Expanding the Child Tax Credit converts a tax credit tied to work into a new, cash benefit welfare program. Turning people from work to government dependency doubles down on the failed welfare state and presents a counterfeit benefit to American families living with the effects of crippling inflation.
When it comes up for consideration, Congress should think of the families that will be hurt by more spending, higher inflation, worsening labor shortages, and lifetime dependency—and they must unequivocally reject the expanded Child Tax Credit.