The health and economic impacts of COVID-19 have exacerbated longstanding economic inequities faced by West Virginians. Thankfully, the recent stimulus and rescue packages have shown us a way to rebuild from the pandemic by investing in families. In particular, the expansions of the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) in the American Rescue Plan (ARP) were among the most critical provisions for family economic security. However, the ARP was narrowly designed to address the high levels of hardship created by the pandemic, and its temporary measures — along with the progress they make in addressing economic hardship — will begin to reverse when these provisions expire.
Policymakers should invest in measures that will create a truly equitable recovery that allows all families to thrive. Fortunately, in the coming weeks and months, we expect Congress to consider a recovery package that can and must further those investments, build toward an equitable recovery, and lift West Virginia families out of poverty once and for all. An equitable recovery package should extend — or better yet, make permanent –important expansions of the Child Tax Credit and the Earned Income Tax Credit and eligibility for the Supplemental Nutrition Assistance Program, as well as ensure comprehensive paid leave for workers and families.
The Child Tax Credit (CTC) is a tax credit much like any other — it reduces a filer’s tax bill when they file their taxes. While other tax credits provide relief for things like buying a home, student loan interest, or business expenses, the CTC is based on the costs incurred while raising children. The expansion of the credit impacted nearly 400,000 children in WV. Below, we highlight a couple of reasons why it is so critical for us to keep the CTC in its current expanded form:
Previously, the CTC refund was equal to 15 percent of earnings above $2,500. As such, the lowest earning families in our state were getting the least amount of assistance to help raise their children, while higher earners were able to get the refund in full. Removing this barrier allows families who make less money to get the full refund, as well. Children in low-income families have the same needs as children in higher income families, and the tax credit now provides equal aid to fulfill those needs. Previously, the credit was only refundable up to $1,400. If a family was expecting a tax return greater than that, they wouldn’t be eligible for the full $2,000 credit as provided. The credit is now fully refundable in its current state.
Many of us have experienced the rush of getting a big tax return, but imagine if you could receive that return in monthly installments throughout the year. For a tax credit like the CTC, this could mean having the money to pay for monthly child care expenses, tutoring fees, and much more. Raising a child is not a one-time purchase. While a larger lump sum payment is beneficial in many situations, these monthly installments allow parents to use their tax refund as it is accrued (while paying taxes on things they need to raise their child), rather than only at the end.
These provisions allow more WV families to take advantage of this tax relief, and they provide the relief when it’s needed. An estimated 38,000 children will be lifted out of poverty by the expansion of the CTC, and we can help keep them there. But what about low-income workers without children? That’s where the Earned Income Tax Credit (EITC), the Supplemental Nutrition Assistance Program (SNAP), and federal paid leave come in.
The expansion of the EITC under the ARP increased eligibility for low-paid adults not raising children in the home. This tax credit historically benefits low-earning workers, with increases based on marital status and children. However, in the past, eligibility has largely excluded low-earning workers who aren’t raising children. Now, with the ARP expansion, both the refund amount and income cap for low-earning adults not raising children in the home have been raised. The refund amount for this bracket has been increased from roughly $540 to roughly $1,500, and the income cap has gone from $16,000 to roughly $21,000. Overall, this puts more money in 110,000 low-earning West Virginia workers’ pockets.
Adults who are between the ages of 18 and 49 who do not live with minor children and are not disabled can qualify for food assistance through the Supplemental Nutrition Assistance Program (SNAP). However, their food assistance is strictly limited, as they can only get that food assistance for three months if they are unable to meet strict work requirements. This essentially serves as a time limit, removing critical food assistance from adults who struggle to find work. The Families First Coronavirus Response Act rightfully suspended this limit, but this is another temporary policy that should be made permanent. Anything less would ignore the reality of the labor market and cause unnecessary suffering.
While we’ve recognized the importance of paid leave during the pandemic and lawmakers have enacted temporary paid leave provisions related to COVID-19, paid leave must also remain a priority as we emerge from this crisis. Currently only 20 percent of private sector workers nationally have access to paid time off to care for a new child or family member. Workers across the state need to take time off from work for parental leave, due to serious illness, or for caregiving responsibilities, and they shouldn’t be forced to choose between their health and their economic security. Paid leave provides stability to families, as well as businesses which see reduced turnover and increased productivity and morale among workers. In order to build a recovery that allows all families to thrive and ensures that everyone can get back to work, Congress must prioritize a national paid leave program for all workers.
We have an historic opportunity to build a more equitable economy for all West Virginians. These investments will not only enable a strong recovery from the economic impacts of COVID-19, but also provide the necessary foundation for a secure future. Congress should move quickly to consider plans that include the critical programs discussed above, and should be sure to advocate for these programs if they are not included in upcoming recovery plans.
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