We just witnessed a massive moment in history. Congress recently passed the Inflation Reduction Act (IRA), a significant piece of legislation that invests in our climate, reduces health care costs for many families, and requires corporations to pay more of their fair share in taxes. However, the bill did not include one of our top priorities—an expansion of the Child Tax Credit and the Earned Income Tax Credit.
With millions facing economic hardship, the fight to restore access to the Child Tax Credit and Earned Income Tax Credit is not over.
This was heartbreaking. We saw how much these measures could do to reduce poverty when they were temporarily made available to more people during the height of the COVID-19 pandemic. When congress let the expanded CTC lapse in January, nearly 4 million children fell into poverty. When expanded EITC access ended, millions of families, young people, and the elderly lost this essential support.
With millions of households facing economic hardship, the fight to restore access to these tax credits is not over. Advocates are still pushing to get Congress to enact these measures before the end of 2022.
What’s next for these tax credits?
Congress has a short window to pass legislation before the end of the year, so advocates are lobbying lawmakers to attach these tax credits to any moving legislative vehicle. One good contender is an end-of-year tax package.
There’s precedence for this. In 2015 Congress passed an end-of-year tax package that extended and altered multiple tax provisions, including the EITC and the CTC. This precedent gives advocates a clear path to continue working to achieve improvements, like making the CTC available to more low-income families and expanding eligibility for the EITC.
Our message to Congress is simple: businesses should not get relief over families.
Right now, lawmakers are under immense pressure from the business community to renew the business tax credits that expire at the end of this year. Advocates are pushing for any corporate tax breaks to be paired with the expansions of the CTC and EITC in year-end tax legislation. Our message to Congress is simple: businesses should not get relief over families.
Any end-of-year tax package that includes tax breaks for businesses must also include relief for families in the form of the CTC and EITC expansions.
What are our chances of success?
With pressure mounting from business and anti-poverty advocates alike, the chances are good that Congress will act. We are hearing that there is widespread support on Capitol Hill for expanding the CTC by the end of the year. Bipartisan conversations among members of Congress have already begun.
Advocates are working right now to ensure that members of Congress continue to make this a top priority in any end-of-year tax legislation.
For changes to the tax code to be impactful, however, any agreement to expand the CTC needs to increase refundability, meaning the tax credit must be made available to more low-income families. We also reject any proposals that would cut programs that serve vulnerable communities to pay for these tax credits. Finally, FCNL strongly opposes tying access to these credits to conditions such as work requirements, which have been shown to be both racist and ineffective. Years of systemic racism—including barriers to employment, education, and access to wealth—mean that any work requirement would disproportionately exclude families of color. Expanding access to the Child Tax Credit can significantly reduce poverty among this same group. When access to the CTC was temporarily extended to all families regardless of income in 2021, poverty dropped by 52% for Black children, 45% for Hispanic children, and 61% for Native children.
Next Steps: What You Can Do
Despite not making it into the Inflation Reduction Act, efforts to reduce poverty by expanding access to the CTC and EITC are not dead. Advocates are working right now to ensure that members of Congress continue to make this a top priority in any end-of-year tax legislation.
This work is more important now than ever. Millions of people are facing economic hardship. They are depending on us to restore these tax credits so that they are available to everyone who needs them. Now is the time to tell your members of Congress: No tax breaks for corporations without relief for families—expand access to the CTC and EITC!
