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End Of Extended Child Tax Credit Caused Increase In Child Poverty Rate

Child Tax Credit
Child Tax Credit; Source- Forbes

The U.S. Census Bureau stated that child poverty increased by more than double in the U.S. last year as a result of the expiration of financial aid that had helped families during the early stages of the COVID-19 outbreak. According to data from the agency, the percentage of children living in poverty increased to 12.4 percent in 2022 from 5.2% the year before. The Census Bureau ascribed the rise to the cessation of the extended tax credits for children and the stimulus payments that had kept holds afloat throughout the Covid-19 economic downturn.

Child Tax Credit

Child Tax Credit; Source- Forbes

Financial Pressure Due To Inflation

Families faced severe strain from inflation at the same time as financial aid from the pandemic era was losing its effectiveness. As per the Census Bureau, the cost of living increased 7.8% between 2021 and 2022, the highest yearly increase since 1981. During the epidemic, the United States had achieved significant victories in the fight against child poverty, thanks in great part to the enhanced tax credits. Following Census data provided the previous year, the child impoverished rate decreased by 46 percent in 2021 to reach its lowest level ever. However, such gain was undone by the termination of important epidemic benefits and rising prices.

Child Poverty Rate Increased

According to the figures, the total poverty rate increased by about 5%, the first rise since 2010. All workers’ median salary decreased by 2.2% in 2022 in comparison to the previous year. Under the American Rescue Plan, the Democratic-led Congress stimulated the economy in March 2021 to the tune of roughly $2 trillion. Through a procedure known as budget reconciliation, the Democrats were able to pass the relief without the support of a single Republican. The enormous aid package temporarily enhanced child tax credits by a large amount. Children below the age limit of six received $3,600, and children aged six to seventeen earned $3,000 for working households. In addition, a third batch of stimulus payments were issued under the legislation, building on past relief during the Trump administration.

End Of Extended Child Tax Credit

The end of 2021 marked the end of the extended child tax credit program. In the midterm elections in 2022, Republicans took back control of the House, and since then, Congress has been unable to agree to reinstate the credits. The loss of several additional epidemic benefits this year is not taken into account in the Census statistics that show a rise in child poverty. Expanded food benefits expired in March, and billions of individuals have been dropped from Medicaid as a result of last spring’s expiration of safeguards that kept them registered in the program.

More than 760,000 children, according to Georgetown University researchers, have lost their Medicaid coverage. States have received warnings from the federal government that many kids who were still qualified for the program may have been turned away. The Census Bureau released data on Tuesday that is different from the official impoverishment rate, which stayed virtually the same at 11.5% in 2022. The official rate of poverty considers a person’s income before taxes but excludes tax credits and stimulus payments. An alternate measure that takes these benefits into account and examines income after taxes is the Census figures that demonstrated a doubling of child poverty.

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