Making child tax credit payments permanent debated

Four-year-old Aumora Whitson plays at Island MetroPark in Dayton. Aumora's mother, Hayley Ratliff, has received advance child tax credit payments but worries they could impact her taxes next year. CORNELIUS FROLIK / STAFF
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Four-year-old Aumora Whitson plays at Island MetroPark in Dayton. Aumora's mother, Hayley Ratliff, has received advance child tax credit payments but worries they could impact her taxes next year. CORNELIUS FROLIK / STAFF

Fewer Ohio adults go hungry after IRS issues payments; opponents say it encourages people not to work.

The number of Ohio adults living with children who sometimes or often do not have enough to eat has dropped sharply since the federal government started distributing new child tax credit payments, according to this newspaper’s analysis of Census survey data.

Ohio households with more than 2.1 million children have now received two tax credit payments, and some researchers say the first distribution alone kept about 3 million U.S. kids out of poverty.

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Kids play in RiverScape's interactive fountain on a recent weekday. CORNELIUS FROLIK / STAFF

Kids play in RiverScape's interactive fountain on a recent weekday. CORNELIUS FROLIK / STAFF
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Kids play in RiverScape's interactive fountain on a recent weekday. CORNELIUS FROLIK / STAFF

Census researchers say a decrease in households with children experiencing food insufficiency and difficulty paying household bills may be linked to the child tax credit checks.

Some groups say the tax credit should be made permanent to serve almost as “Social Security for kids.”

The Hall Hunger Initiative “strongly supports the new child tax credits and believe this program is making a quick and significant impact,” said Mark Willis, director of the Hall Hunger Initiative, which is based in Dayton.

But opponents say it would be a big mistake to make this “child allowance” benefit permanent because it encourages more families not to work and single parenthood.

“I worry that by providing expanded benefits that are not conditioned on work, more parents will choose to work less,” said Scott Winship, senior fellow and director of poverty studies at the American Enterprise Institute, a conservative-leaning thinktank.

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Brandy Halstead moves boxes of food to a vehicle at a food distribution site at Living Word Church in Vandalia.

Credit: JIM NOELKER

Brandy Halstead moves boxes of food to a vehicle at a food distribution site at Living Word Church in Vandalia.
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Brandy Halstead moves boxes of food to a vehicle at a food distribution site at Living Word Church in Vandalia.

Credit: JIM NOELKER

Credit: JIM NOELKER

Since mid-July, less than 6.5% of Ohio adults living with children reported sometimes or often not having enough to eat, according to Census experimental household pulse survey data.

Child tax credit checks started being distributed on July 15, but before that happened, between 10% to 11.3% of Ohio adults living with children said they sometimes or frequently were short on food.

The American Rescue Plan, passed in March, expanded access to the child tax credit, increased benefit levels and directed the IRS to pay out benefits in monthly installments, according to the Center on Poverty and Social Policy at Columbia University.

The monthly tax credit on its own could reduce child poverty by about 40%, and the reduction could be larger when combined with other COVID-19 related relief, the center said.

Half of the total tax credit amounts will be paid in monthly distributions, which began in July and will run through the end of year.

The average payment in Ohio was $436, according to the U.S. Treasury.

The child tax credit appears to be having an immediate impact, said Willis, with the Hall Hunger Initiative.

Most people don’t realize how severe child poverty is in this country, he said, and in Dayton, 40% of children lived in poverty pre-pandemic, which was one of the highest rates in the nation.

Food spending is one of the first things people slash when their budgets get tight, he said, which is unfortunate because lack of access to healthy food can have short-term and long-term impacts on child development.

Supporters of the advance tax credits they are doing more than just helping reduce hunger.

According to pulse survey data from between June 9 and July 5, about 1.24 million Ohio adults in households with children reported difficulty paying for usual household expenses, which was before the tax credit payments started being issued, said Will Petrik, budget researcher with liberal-leaning Policy Matters Ohio.

But after the payments began, between July 21 and Aug 16, about 746,500 adults in households with children said they had a hard time paying regular expenses ― which is a 40% decline in large part due to the expanded tax credit, he said.

“The child tax credit has already made a meaningful difference in the lives children and families in Ohio,” he said. “The latest data shows that fewer families are experiencing food insecurity.”

He continued, “Families have additional resources to put food on the table, pay for diapers, healthcare and other basic expenses.”

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The Foodbank held it's mass food distribution Thursday, Aug. 27, 2020 at the University of Dayton Welcome Stadium.

Credit: Marshall Gorby

The Foodbank held it's mass food distribution Thursday, Aug. 27, 2020 at the University of Dayton Welcome Stadium.
Caption
The Foodbank held it's mass food distribution Thursday, Aug. 27, 2020 at the University of Dayton Welcome Stadium.

Credit: Marshall Gorby

Credit: Marshall Gorby

The tax credit is temporary, but Policy Matters Ohio, the Hall Hunger Initiative and some other groups are calling on Congress to make it permanent.

Other want the program to expire.

Winship said single parents are among the lowest-income parents, and the expanded tax credit could increase single parenthood by making it more viable.

While child tax credits might reduce poverty and hardship in the short-term, there is a big risk that making the credit permanent would be harmful in the long-run, worsening intergenerational poverty, upward mobility and social poverty, Winship said.

“Less parental work and more single parents would hurt child opportunities in the long run,” he said.

Winship said expanding the tax credit might be worth the potential risks if it was the only way to reduce child poverty ― but it isn’t.

If appropriate work requirements and time limits are in place, other safety net programs could be made more generous without risking long-term dependency and incentivizing mobility-impeding behavior, he wrote in a report earlier this year.

He also said the child tax credit program could be changed and expanded to more greatly benefit married couples.

Hayley Ratliff said she didn’t know about the advanced child tax credit program until she received a deposit in her bank account.

The 25-year-old Dayton resident said she liked the tax credit program as it was and worries the payments could affect her taxes.

“I’m not really sure how to feel about it,” she said. “I feel like it is going to mess up my taxes next year.”

Caption
Four-year-old Aumora Whitson plays at Island MetroPark in Dayton. Aumora's mother, Hayley Ratliff, has received advance child tax credit payments but worries they could impact her taxes next year. CORNELIUS FROLIK / STAFF

Four-year-old Aumora Whitson plays at Island MetroPark in Dayton. Aumora's mother, Hayley Ratliff, has received advance child tax credit payments but worries they could impact her taxes next year. CORNELIUS FROLIK / STAFF
Caption
Four-year-old Aumora Whitson plays at Island MetroPark in Dayton. Aumora's mother, Hayley Ratliff, has received advance child tax credit payments but worries they could impact her taxes next year. CORNELIUS FROLIK / STAFF

The payments are not taxable, and recipients on their tax returns next year will reconcile the monthly payments they receive from the IRS with the child tax credit to which they are entitled, according to Kiplinger, a business and economic forecasting publishing company.

Ratliff said the original program worked fine, and while the money is a little helpful, she does not need monthly installments.

“I’m worried they over pay me and then I’ll owe money when it comes (tax) time,” she said, adding that she’d be OK with this program if she was certain she wouldn’t have to repay the IRS any money.

Kiplinger says the IRS may require advanced tax credit recipients to pay back overpayments.

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