The survey — which was administered by the polling firm Ipsos in consultation with the National Women’s Law Center, the Center for Law and Social Policy, researchers from the University of California at Berkeley and others — was conducted in July, just as the first payments from the expanded child tax credit were rolling out. However, the survey results raise questions about whether the tax credit’s benefits are reaching those who need it most.
The day before the poll came out, Sen. Joe Manchin III (D-W.Va.) criticized the expanded child tax credit for not being targeted enough.
“There’s no work requirements whatsoever,” Manchin said on CNN “State of the Union.” “There’s no education requirements whatsoever for better skill sets. Don’t you think if you want to help the children, the people should make some effort?”
Families across the income spectrum have long qualified for some form of tax relief, but earlier this year, as part of the $1.9 trillion coronavirus relief measure, the Biden administration began allowing parents to receive half of their refunds in advance through small monthly payments.
Under the previous child tax credit, families received a lump benefit of up to $2,000 per child off their tax bills, but many low-income families received a smaller benefit, and some didn’t qualify at all. Parents can now receive $250 per month for each child between ages 6 and 17, and $300 for each under age 6, for up to $3,600 per child. The monthly payments are set to expire in December. Researchers believe it will raise 4.1 million children above the poverty line, reducing child poverty by more than 40 percent.
This week, lawmakers on the House Ways and Means Committee began debating whether to extend the monthly installment through 2025 as part of a proposed $3.5 trillion tax and spending package. The bill would also make permanent a provision that allows the lowest-income families to receive the full benefit.
Amy Matsui, the director of income security at the National Women’s Law Center, believes that the survey findings suggest Congress should extend the expanded tax.
“This is a really important thing to improve families’ stability and their well-being, and it’s helping them make ends meet at a really tough economic time,” she said. “You really can see how hard it would be for families to have this benefit yanked away from them just when they might be starting to dig out from the recession next year.”
The National Women’s Law Center and its partners worked with Ipsos to interview a nationally representative sample of 1,031 households with incomes below $150,000 and children under the age of 18.
The survey data found that most parents, regardless of income, are likely to use part of the credit to pay for bills and basic household expenses. The results echo recent findings released by the Census Bureau’s Household Pulse Survey. In August, parents reported having less trouble covering the costs of food and other household expenses after receiving their first payment. Roughly half of those who received a July payment reported using it to pay for food, and 17 percent of families who have a child under the age of 5 used part of the credit to pay for child care.
Still, disparities exist. The Ipsos survey showed that while four out of five eligible families claimed the credit in 2019 or 2020, parents or guardians with lower levels of education were less likely to do so. Just 68 percent of respondents with less than a high school degree claimed the credit in recent years. A fifth of eligible families were unaware of the monthly advance payments.
Though the credit was expanded to help families who live in poverty, married parents who earn up to $150,000 a year, and single parents who make $112,500 or less can also receive the full credit. Families with higher incomes may also receive a smaller credit, an allowance Manchin noted in his CNN appearance.
“I have got people that are making combined 200 and 300 [thousand] and more, up to 400, saying they’re getting checks,” Manchin said. “We’re not having anything about need base.”
Manchin’s support is key to extending the tax credit because of the Democrats’ narrow majority in the U.S. Senate. His office did not return requests for comment.
Both the Ipsos survey and the census poll have found that families with higher incomes are more likely to save their tax refunds, including the child tax credit, than spend it on bills.
Virginia National Guard member Phillip Lacey, a married father of two young children, said he planned to invest this year’s payments into a college fund for his daughters.
“For our family, our budget is not so tight, so whether it continues in the monthly installment or annual lump sum has no effect,” Lacey said.
Still, the survey found that most families used part of their refund to pay for necessities, regardless of their income.
David Santos teaches high school social studies in Oxford, Conn. He and his wife have two young girls, and in the past, they’ve used their tax refund on preschool and debt repayments. They’re not poor, but Santos’s wife stays home with their children, in part because day care costs nearly as much as she earned working as a teacher.
Supporting a family on one salary has meant they’ve given up “a lot of normal things,” Santos said. They don’t go out to eat. They only visit the local science museum when it’s running a promotion, and otherwise, they stick to free entertainment at the park. But earlier this year, in late June, they took their first vacation in seven years. On their way back from Hersheypark, their Subaru blew the head gasket. The repair cost $3,400, and the family had to stay in a hotel while they waited for a mechanic to fix the car.
Under the previous tax credit model, the family would have received a refund when Santos files his taxes, but the advanced payments, which began arriving in July, helped the family “not go into further debt” this year, Santos said. “In the end, I’m assuming it’ll be neutral, but having it now is better because it offsets the problem I have now.”
Matsui said her group conducted the study, in part, to help community groups better reach the families who need it most. The Ipsos poll found that among parents who lack a high school degree, nearly a third had not heard about the monthly payments. In previous tax years, the group found, more than half of respondents learned about the credit from their tax forms, while a quarter heard about it on television or other news media. Just 2 percent learned about the credit from community groups.
Even when they do hear about the tax credit, Angela Rachidi, a Rowe scholar in poverty studies at the American Enterprise Institute, said her analysis shows it would do little to help families find a long-term path out of poverty.
“The amount of money we’re talking about certainly would reduce poverty, but the question is by how much,” she said. “The poverty line is just that. It’s a line. You’re taking families who are just below that line to just above that line. To what extent is that really improving the condition of poverty remains a major question. This is doing nothing to affect education quality, neighborhood quality, marriage rates.” She adds, “Are we really addressing the underlying causes of poverty with this policy? And I would argue no. And then what is that cost of that?”
The Committee for a Responsible Federal Budget estimates that extending the expanded credit through 2025 and permanently allowing the lowest-income families to claim it, will cost roughly $450 billion. Last month, in the second of the six planned installments, the U.S. Treasury Department paid more than $15 billion to families with roughly 61 million children.
Santos said that’s an investment he believes legislators should make.
“There is the national debt issue, but I doubt this makes much of a dent in that,” he said. “I’m totally for it because to be honest kids are very expensive, and nobody’s salary, unless you’re making a crazy amount of money, is appropriate for the time period we live in. At least for somebody in our financial situation, and I imagine there are people worse off, this has got to be a gigantic help. I think there’s a lot of people in D.C. who have maybe lost touch with reality about how much things are, groceries and other things just to be able to live your life.”
This story has been updated.