On Thursday, July 15, roughly 35 million American families woke up to see a little bit extra in their bank accounts. This extra, enhanced child tax credits made possible by the American Rescue Act that was passed down party lines earlier this year, calls for an extra $1,600 for qualifying families with children under the age of 6 and an extra $1,000 for those with children ages 6 to 17. About half of this total credit ($3,600 and $3,000, respectfully) will be delivered in monthly payments, which began in July and will continue through December. The remaining credit can be claimed when families file their 2021 income taxes.
The thinking behind the enhanced child tax credit and its distribution plan is that it can help those who need it most now – and not at tax time. Experts also believe that it could halve child poverty in the United States. All of this has been received favorably by the American public, and even Republican lawmakers who did not vote “yes” on the American Rescue Plan are touting this enhanced credit to their constituents. It leads some to believe that this could become more than just a one-year thing. But doing so faces obstacles in Congress.
Economists believe that the price tag of extending the enhanced child tax credit over the next 10 years will cost aboout $1.5 trillion. Those in the Biden administration, such as Treasury Secretary Janet Yellen, are already calling for it. But there are roadblocks in Congress that could prevent this, and when you consider the estimated price tag and the fact that the American Rescue Plan was passed down party lines, it certainly has its detractors.
In order for it to become permanent, it will have to be worked into the budget – and the $3.5 trillion budget that Democrats unveiled last week is a good starting point. However, being that no Republican is likely to vote “yes” on this budget, Democrats must produce a reconciliation bill that can be shielded from a filibuster so it can pass along party lines. And in order to pass it along party lines, this bill will have to gain the support of some of the more moderate Democrats in Congress, notably West Virginia Senator Joe Manchin and Arizona Senator Krysten Sinema. These two have already objected to several Democrat-inspired concepts, such as ending the filibuster.
So will the child tax credit get extended? Right now, we’d say that it’s likely – but not indefinitely. The better bet is that it will be extended for at least a few more years, perhaps until 2025 when some of the other tax provisions are scheduled to conclude. Stay tuned as we watch how this plays out over the course of the coming months.
This is a whole we are digging and if not stopped we will drown. We cannot keep giving money out. Someone is going to pay and it will be you and I. wake up people before it is too late.