MORGANTOWN — Whatever the fate of Build Back Better after the New Year — in whatever new form it might take — the expanded Child Tax Credit that Democrats hoped to continue as part of the legislation is coming to an end. The last payments went out Dec. 15 and the expanded program ends Dec. 31. It returns to pre-pandemic form starting Jan. 1.
The Dominion Post asked Sens. Joe Manchin and Shelley Moore Capito and Rep. David McKinley their thoughts on the CTC as discussions on reviving Build Back Better continue. Capito and McKinley both opposed BBB and Manchin effectively killed it — or put it into a coma, at least — with statements he made Dec. 19.
Manchin declined comment for this story but has addressed the CTC previously. Capito and McKinley both responded in email exchanges.
First, what is the CTC? It’s a tax credit designed to help families raise their children. In 2017, under the Tax Cuts and Jobs Act, the maximum credit was doubled from $1,000 per year per eligible child to $2,000.
Then, under the American Rescue Plan passed in response to the COVID-19 pandemic, it was increased to $3,600 for children up to age 5 and to $3,000 for ages 6-17; the age limit was raised from 16 to 17; instead of a credit it was turned into a monthly payment; and it was made fully refundable, meaning families got to keep the money even if their tax bill was less than the total credit. The previous refund cap was — and will be again on Jan. 1 — $1,400.
Making it refundable was aimed at helping low-income families who needed the money but couldn’t qualify for it because they paid no taxes.
Discussions on extending the CTC went back and forth on how long to extend it — finally settling on one year.
A primary driver for the credit is alleviating child poverty. As previously reported, data shows that every $1,000-increase in family income correlates with an 8% to 10% decrease in Child Protective Services involvement. According to news reports, a Columbia University study showed that the first installment of the CTC lifted 3 million kids out of poverty in July.
The top five uses for the credit are saving for emergencies; applying it toward food and housing; buying clothes and other essentials for the kids; buying more or better-quality food; contributing to a college fund.
Manchin again explained his overall objection to BBB last Sunday. He said in a statement: “My Democratic colleagues in Washington are determined to dramatically reshape our society in a way that leaves our country even more vulnerable to the threats we face. I cannot take that risk with a staggering debt of more than $29 trillion and inflation taxes that are real and harmful to every hard-working American at the gasoline pumps, grocery stores and utility bills with no end in sight.
“The American people deserve transparency on the true cost of the Build Back Better Act. The non-partisan Congressional Budget Office determined the cost is upwards of $4.5 trillion, which is more than double what the bill’s ardent supporters have claimed. They continue to camouflage the real cost of the intent behind this bill.”
Manchin in other comments expressed several objections to extending the expanded CTC. One is that as with the rest of BBB, the true cost was hidden. Entitlements don’t go away and the $140 billion figure he had at the time for a year of CTC would balloon to $1.4 trillion over 10 years (the one-year price tag was later raised to $190 billion, according to data cited by GOP senators from the Committee for a Responsible Federal Budget, the Tax Policy Center and the Joint Committee on Taxation).
He said the income caps were too high, and told MetroNews that it allowed families making as much as $200,000 or $400,000 to receive some credit that they don’t really need.
He also wanted a work requirement. But CTC proponents have argued this defeats much of the purpose of the credit. It cuts out stay-at-home parents, ill caregivers and parents or guardians who can’t work for any number of reasons — including undergoing substance abuse treatment.
Participants at a recent CTC roundtable in Charleston said the money should follow the child, a point Manchin agrees with but hasn’t been included in the legislation. Many grandparents and other family members care for children in place of their parents.
Tracy King, with FMRS Health Systems — serving Fayette, Monroe, Raleigh and Summers counties — said, under the CTC, they are seeing people who’ve been trying to survive now able to feed their families and access transportation.
About one-third of the youths coming for treatment are living with other family members, mostly grandparents, sometimes great-grandparents, she said. And those grandparents and great-grandparents are retired.
One other objection, cited in various news reports, is that many expanded CTC recipients say they will actually have to reduce their work hours without it because they won’t be able to afford childcare.
Capito’s office said the CTC doesn’t end Dec. 31. Starting Jan. 1, families are still eligible for the full $2,000 per child CTC expanded under the Tax Cuts and Jobs Act. “The only thing that expires at year’s end is the temporary monthly child allowance plus-up that was appended to the CTC as part of Democrats’ partisan COVID ‘rescue’ plan passed earlier this spring.”
Capito referred to the doubling of the credit under the Tax Cuts and Jobs Act and said, “I was proud to support this tax relief bill and specifically that provision because it delivered a key tax break for West Virginia’s families. Fortunately, the tax credit does not expire at the end of the year, and I’ll continue working to enact policies that support parents and children across our state.”
She continued, “Notably, in their massive, $5 trillion spending bill, Democrats hid a provision that would eliminate the requirement of a valid Social Security number for families to claim the Child Tax Credit. This would allow illegal immigrants to claim the tax credit, and affect about 600,000 unaccompanied minors. It’s a shame that Democrats are forgoing the committee process, regular order and any bipartisan input to get their massive tax and spending bill passed that will further fuel President Biden’s inflation crisis.”
McKinley’s office said the 2017 changes to the CTC also expanded eligibility. The credit, in the form it will revert to on Jan. 1, begins to phase out at $200,000 of modified adjusted gross income, or $400,000 for married couples filing jointly, up from the 2017 levels of $75,000 for single filers or $110,000 for married couples filing jointly.
McKinley said, “The Democrats’ partisan Build Back Better bill failed because West Virginians understand that $5 trillion in social spending and expansion of government in our lives would do nothing to address the most pressing issues they are facing. If anything it would make things worse. It would have fueled more inflation, increasing the costs of everything from groceries and home heating and made crisis at the border more serious.”
He continued, “The Child Tax Credit provision is emblematic of the many flawed policies within the bill. As Sen. Manchin pointed out, it did not specifically target low and middle-income families, allowing benefits to go to high-income earners. It also did not include standard work requirements, which would incentivize individuals to return to the workforce.”