The American Families Plan framework as outlined by the Biden Administration represents the single biggest investment in the economic security of workers and families since FDR’s New Deal.
Two specific policies, permanent expansions of both the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), will directly increase the household incomes of hundreds of thousands of workers and families across West Virginia, as well as correct two of the more inequitable features of the federal tax code that existed prior to the COVID-19 national emergency.
The American Rescue Plan Act (ARPA) passed in early 2021 and included a temporary expansion of the EITC to low- and moderate-wage workers who do not have dependent children living in their homes, as well as to workers age 19-24 who were previously excluded. Often referred to as “childless workers,” many of the more than 100,000 West Virginians included in this temporary expansion of the tax code were often deemed “essential” during the pandemic, even though that designation did little to improve their overall household income levels.
To better support families with children, ARPA expanded the current Child Tax Credit, making it fully refundable for all but the wealthiest families. This means that starting in July, families with children under the age of six (including those expecting children) will receive $300 dollars per child monthly and families with children ages 6-17 will receive up to $3,000 dollars per year to help pay for the household expenses that come with raising kids.
Throughout the national emergency, direct cash assistance in the form of stimulus payments and increased unemployment benefits has been an effective economic support for families and workers. As displayed in the graph below, economic hardship is still high a year into the pandemic but cash assistance provisions left people better equipped to afford basic life expenses than they would have been without this relief.
Recent expansions to the EITC and CTC have also made the credits refundable, putting cash directly into the hands of workers and families with children with no restrictions as to how this money can be spent.
Before the expansions of the EITC and CTC, many of the lowest income families and childless workers were left behind — if not outright taxed into (or further into) poverty — by the federal tax code.
The temporary expansions and added refund-ability incorporated into the EITC and CTC begin to address long-standing problems that existed for low-income populations even before COVID-19. Specifically, people of color and rural households stand to gain from making these tax credit extensions permanent. While people of color make up just 6.5 percent of the state’s general population, 11 percent of West Virginia children who would benefit from a permanent CTC expansion are children of color.
Similarly, of the 110,000 low-wage and essential workers in West Virginia who would benefit from a permanent expansion of the EITC, 8,000 or 7.3 percent are estimated to be Black workers, in comparison to a statewide Black population of 3.6 percent.
West Virginia workers in rural areas would also see outsized benefits from expanding the EITC, with 23 percent of childless workers in rural areas (39,000) benefiting compared to 20 percent of childless workers in metro areas. The same trend applies to the expansion of the Child Tax Credit, with 94 percent of children in rural areas (134,000) benefiting compared to 92 percent of children in metro areas. Given West Virginia’s rural geography, the disproportionate benefits to rural communities make it all the more urgent that Congress make these expansions to the EITC and CTC permanent.
We are unlikely to find a legislative framework in recent history that does more to address systemic poverty than that of the American Families Plan. The permanent expansion of the Child Tax Credit alone is estimated to lift 40 percent of children out of poverty across the country, including 23,000 West Virginia children. Overall, 94 percent of kids in West Virginia would benefit from a permanent expansion of the CTC, compared to 90 percent of children nationally.
And the outsized benefits West Virginia would see from the American Families Plan don’t stop there. Over 100,000 frontline and essential workers not raising children (including those between the ages of 19-24) would see critical increases to their household incomes through a permanent expansion of the Earned Income Tax Credit. Further, this would serve as a key adjustment to a long-standing injustice of the tax code that existed prior to the pandemic.
What’s more, very few West Virginia households — just one-tenth of one percent — will see any federal tax impact from the tax increases on the wealthiest households proposed to pay for the programs contained in the American Families Plan, which includes the measures mentioned above, 12 weeks of Paid Family Medical Leave, and expanded access to quality child care and education. Only the very highest income households will be impacted by the Biden Administration’s planned pay-fors — which include eliminating an unfair tax advantage on capital gains income and stock dividends — while hundreds of thousands of West Virginia families and workers will gain economic and household supports that didn’t exist before the pandemic. In fact, West Virginia is one of the five least impacted states by these tax increases on the wealthy, and our state’s people would see outsized benefits from the new programs that would be created. This is why our members of Congress must prioritize West Virginia families and workers by passing the framework of the American Families Plan. We have everything to gain.