As the federal benefits for families come to an end, child poverty rates in the US have skyrocketed, prompting several state governments to take action. Following the expiration of the federal measure at the end of 2021, which provided families with up to $3,600 per child, eleven states have created or expanded a fully refundable child tax credit. These measures helped reduce the child poverty rate by nearly half to 5.2% in 2021. However, since the program lapsed and efforts to revive it failed, the rate has spiked to 12.4% in 2022, and it may have worsened even further. In July, approximately one-fifth of children were living in poverty, close to the pre-pandemic rate.
Recognizing the ongoing struggles faced by many families due to the economic and health impacts of the pandemic, several states have taken significant steps to address this issue. New Mexico, Maryland, and Minnesota are among the states that have adopted some form of tax credit for families, offering some relief. However, it's important to note that these measures only support a small percentage of Americans facing financial hardships. Notably, no states in the South, where poverty rates are particularly high, offer child tax credits.
One of the key advantages of the federal tax credit was its widespread accessibility, as it was available to all eligible families. However, the state programs have their limitations. For example, families in New Mexico can claim up to $600 per child under the expanded child tax credit, with the credit gradually decreasing for families earning over $25,000 a year. Maryland provides a credit of $500 per child under the age of 6 for families with income below $15,000, while Minnesota offers the largest amount compared to other states, providing up to $1,750 per child.
Unfortunately, not all states have been able to compensate for the federal aid that expired for families with children. This loss of additional assistance has hit struggling families particularly hard. Brandi Johns from Syracuse, Kansas, shared her experience of using pandemic-era benefits to buy essentials for her family, including a bike for her son. However, with the assistance no longer available, her current income from working 50-hour shifts at Dollar General Inc. is not enough to make ends meet. Her 7-year-old son now has very few toys to play with, as they cannot afford to fix his bike.
Both Republicans and Democrats have proposed expanding the federal child tax credit. Representative Rosa DeLauro and a group of House Democrats have reintroduced a bill to restore the credit to the amounts established under the American Rescue Plan. In addition, Republican Representative John James has introduced legislation to increase the federal child tax credit to $3,500 per child and $4,500 for children under the age of six. It is recognized that the increase in child poverty not only has immediate consequences but also has long-term effects on the US economy. Researchers at Washington University in St. Louis estimate that child poverty costs over $1 trillion annually, accounting for 5.4% of the country's gross domestic product. Addressing childhood poverty is not only the morally right thing to do but also a smart economic decision.
The state efforts to implement child tax credit measures show recognition of the urgent need to support struggling families. However, broader support at the federal level is needed to effectively address child poverty and its long-term consequences.