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Dramatic increase in child poverty in the USA – affecting almost four million children
In the USA, the child poverty rate rose from 12.1 to 17 percent within a month (symbol image).
© Winfried Rothermel / Imago Images
Millions of households in the United States received a monthly advance payment of child tax credits with the “Child Tax Credit” last year. With the cessation of payments, child poverty has increased significantly.
The White House described the early payment of child allowances as a “historic tax break”. The measure, which is now expiring, is part of the “American Rescue Plan”. This is a $1.9 trillion stimulus package designed to cushion the economic and health impacts of the pandemic.
36 million US households benefited from payments
36 million households benefited from the financial aid. Normally, the state pays out the child allowance once a year with the tax return. As part of the Corona aid, the White House decided last year on an alternative solution, the extended child allowances. In the current year, parents have already received half of the child allowances that they would otherwise have received in 2022. The sum was paid out in six monthly installments. Thus, according to the US American Ministry of Finance “Receive financial support on a consistent basis instead of waiting for the tax return”.
In addition, the government has increased the amounts. For a child under the age of six, the legal guardian is entitled to a total of $3,600 instead of $2,000 per child. For six to 17-year-olds, it’s $3,000 instead of $2,000. The age limit was also raised: from 16 to 17 years.
“Short-term victory in the fight against child poverty”
The Child Tax Credit was paid out for the last time in December. The effects were already noticeable in the following month. The child poverty rate rose from 12.1 to 17 percent. In absolute numbers, that’s 3.7 million more children now falling below the poverty line. That’s according to a study by Columbia University’s Center for Poverty and Social Policy.
With the omission of the amounts live according to the Columbia University now a total of 12.6 million children in poverty. Black and Hispanic children are particularly affected. One in four black children fell below the poverty line in January, up 600,000 from the previous month. In the latter group, there were 1.3 million more.
Although President Biden supports the expanded child tax credit, the periodic payments have not been extended.
© ZUMA Wire / Imago Images
In an article in the “Washington Post“.
Child poverty rate in the US will remain high
However, the parents are still entitled to the second half of the tax allowance for the 2021 tax year. You will receive the money as usual after submitting the tax return. The researchers at Columbia University expect that the poverty rate will fall suddenly, but not permanently. “It is likely that the monthly child poverty rate could remain high until the end of 2022 without the extended child allowance,” the experts predict.
President Biden pleads according to the White House for extending the financial relief and even keeping it permanent. The “Child Tax Credit” is considered the most important driver of the “American Rescue Plan”. Among other things, this provides for halving child poverty in the country in the long term. However, the government is currently reducing spending on corona aid in order to curb inflation. This is not the only reason why a majority of politicians spoke out against the “Child Tax Credit”.
Compromise in the US?
For example, Senator Joe Manchin argued the payments could encourage parents to retire. The Columbia University study, on the other hand, comes to the conclusion that the child allowances had no negative effects on the parents’ employment. The experts only mention positive effects: The payments are a financial buffer that enables families to meet basic needs.
Samuel Hammond, Director of Welfare and Poverty at the Niskanen Center, describes the expanded child allowance in an interview with the “Washington Post” as “one of the most effective anti-poverty measures of this generation”. In the long run, the government could agree on a compromise. Senator Mitt Romney suggested maintaining the payments, but reducing the total amount to a lower sum. However, there are no signs yet for an early agreement on the issue.
Swell: Columbia University“The Washington Post“, “The Washington Post“, The White House, US Department of the Treasury