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January 06, 2023 HUMAN RIGHTS

Pandemic Tax Relief Pummels Child Poverty: Time to Make It Permanent

by Francine J. Lipman
If we don't stand up for children, then we don't stand for much.

Marian Wright Edelman

2020 ABA Thurgood Marshall Award Recipient

Almost 60 years ago, Reverend Dr. Martin Luther King led the March on Washington for Jobs and Freedom demanding government recognition of and remedies for the immorality of poverty and inequality. In front of the Lincoln Memorial, Dr. King, who was the last to speak, told 250,000 nonviolent protesters about his now-famous dream for a better tomorrow for his children. A few years later in November 1967, based on a suggestion from Marian Wright Edelman, Dr. King organized the Poor People’s Campaign to focus the civil rights movement on economic justice. Tragically, King was murdered a few months later at the age of 39.

In 2017, Reverend Dr. William J. Barber II and Reverend Dr. Liz Theoharis resurrected King’s Poor People’s Campaign to continue the unfinished battle against economic inequality and poverty. Poverty continues to ravish America, costing trillions of dollars annually and exacting unspeakable harm to millions. Child poverty alone costs more than $1 trillion per year in lost economic productivity, homelessness, and increased physical and mental health care, education, crime, and judicial costs. Housing insecurity costs for households with children will exceed $111 billion in unnecessary health care and special education assistance over the next decade. Food insecurity costs $178.8 billion per year in increased health care and educational assistance costs. Tragically, the physical and mental impact on kids who suffer long-term poverty triggers detrimental stress hormones that permanently affect children’s brain development and even their genes. The damage to childhood development is so severe that medical professionals now describe the early effects of poverty as a childhood disease.

In 2021, enhancements to the Child Tax Credit caused childhood "after-tax and transfer" poverty to decrease from 9.7% in 2020 to 5.2% in 2021.

In 2021, enhancements to the Child Tax Credit caused childhood "after-tax and transfer" poverty to decrease from 9.7% in 2020 to 5.2% in 2021.

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Economic Response to COVID-19

Ironically, the economic response to the global pandemic dramatically mitigated poverty in America. In 2021, enhancements to the Child Tax Credit (CTC) among other responses to COVID-19 hardships caused childhood “after-tax and transfer” poverty (designated Supplemental Poverty Measure (SPM) by the U.S. Census Bureau) to decrease from 9.7 percent in 2020 to a historically record low of 5.2 percent in 2021. The 2021 CTC accounted for 46 percent of this decrease by lifting 5.3 million people out of poverty, including 1 million children under 6 and 1.9 million children aged 6 to 17.

While more white households received pandemic tax benefits than households of color, children of color who are disproportionately poor due to racism also experienced historically record low SPM poverty rates in 2021. The CTC reduced the 2021 child SPM poverty rate to 8.4 percent from 14.9 percent for Hispanic children (716,000 children); to 8.1 percent from 14.9 percent for Black children (1.2 million); to 2.7 percent for white children (820,000 children); and to 5.1 percent for Asian children (110,000 children). While these reductions are exceptional, they also evince the enormous disparities in poverty between white children and children of color.

What is noteworthy is that even impoverished children who were not lifted above poverty thresholds (incomes at or below 100 percent of poverty thresholds) experienced increased household income. Similarly, children in near poverty (100 percent to 149 percent of the poverty threshold) experienced increased household income keeping them farther from the precipice of poverty.

Further CTC Enhancements

The 2021 enhancements to the CTC that included an additional $1,600 for qualifying children under 6 and $1,000 for children 6 to 17 were especially effective. These enhancements reduced poverty for more than 2.1 million children, including 752,000 Hispanic, 649,000 white, and 600,000 Black children. This result is not surprising because the 2021 CTC was designed to maximize investment in the most vulnerable children and their families. Unlike the current and prior CTC, 2021 CTC benefits do not depend on earned income or taxable income. Therefore, families who suffered the deepest levels of poverty and who received no benefits from prior year CTCs enjoyed life-changing benefits from the 2021 CTC of up to $3,600. From the first monthly CTC payment to the last monthly payment in December 2021, millions of children and their families were lifted out of poverty (ranging from 3 million kids in July to a high in November of 3.8 million kids).

Despite this phenomenal success and the Biden administration’s strong support, a divided Congress narrowly failed to extend these enhancements to 2022. The adverse impact was immediate. The January 2022 monthly child poverty rate increased by more than 40 percent to 17 percent in January 2022, the highest rate since the end of 2020 representing 3.7 million children falling into poverty. Latinx and Black children experienced the largest increases in poverty (7.1 percent and 5.9 percent, respectively). As poverty data continues to flood in from the U.S. Census Bureau and others, the evidence is compelling that the 2021 CTC enhancements were an unprecedented success. All Congress has to do to salvage these kids from poverty is extend them. Dr. King’s wisdom from 1964 resonates today, “There is nothing new about poverty. What is new, however, is that we have the resources to get rid of it.” 

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Francine J. Lipman

Member, Human Rights Magazine Editorial Board; Co-Chair, ABA Section of Civil Rights and Social Justice Economic Justice Committee; William S. Boyd Professor of Law, UNLV William S. Boyd School of Law

Francine J. Lipman is the William S. Boyd Professor of Law at the University of Nevada, Las Vegas, William S. Boyd School of Law. She also serves as a member of the Human Rights Magazine editorial board, is the current issue editor, and is the ABA Membership Representative for Nevada.