Fifty nonprofits from across Minnesota joined a sign-on letter to the Minnesota Congressional delegation expressing strong support for recent improvements to the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC) that were included in the American Recovery and Reinvestment Act (ARRA). These improvements help struggling Minnesota families to make ends meet. They provide powerful incentives that promote work, self-reliance and parental responsibility.
The Recovery Act, passed by Congress in 2009, allowed more low-income families to qualify for the Child Tax Credit of up to $1,000 per child. But this lower wage threshold is set to expire at the end of this year unless Congress acts to pass an extension of the provision. Approximately 156,000 Minnesota children and their families have benefited from this improvement to the Child Tax Credit, which brought an additional $126 million to Minnesota families.
The Recovery Act also increased the Earned Income Tax Credit for families with three or more children and some families headed by married couples. But this improvement to the EITC is also set to expire at the end of this year unless Congress acts to extend it. Approximately 102,000 Minnesota households have benefited from the EITC improvements, which brought an additional $51 million to Minnesota working families.
Extending the Child Tax Credit is especially important for children living in rural areas, including tens of thousands of children living in rural parts of Minnesota. The Center on Budget and Policy Priorities finds that:
Rural children will be roughly 20 percent more likely than those in metropolitan areas to face reductions in their child credit if Congress fails to extend the Recovery Act improvement. Nationwide, rural America includes 15 percent of all children — but 18 percent of the children whose Child Tax Credit would be reduced.
So what would the expiration of the improvements to the Child Tax Credit mean to Minnesota families?
A parent with two children who works at a full-time minimum wage job would see her Child Tax Credit cut from $1,725 this year to only $248 next year – a loss of $1,477. It’s estimated that 600,000 children nationwide will fall into poverty because of the loss of part or all of their Child Tax Credit and an additional four million children who are already living in poverty will become even poorer, according to the Center on Budget and Policy Priorities.
Congress is expected to take up a package of tax legislation some time in July or early August. Congress should extend the improvements in the Child Tax Credit and Earned Income Tax Credit, which have made a difference to thousands of Minnesota families with children. Evidence shows that this kind of federal spending helps boost consumer spending – a critical part of helping along the nation’s economic recovery.
- Steve Francisco
