Joe Manchin has waived the child tax credit. Could the United States save the children instead?

To the chagrin of Democrats and eager receivers across the country, the 2021 expansion of Child tax credit (CTC) is dead, at least temporarily, with payments set to expire next month.

That’s because Congress didn’t pass an extension of the new Child Tax Credit before going home for the holidays, after the Senator moderated. Joe Manchin (D-WV) refuses to vote ‘yes’ for Rebuild action better. Democrats have been trying for months to include the Child Tax Credit extension in their signature social spending package, but Manchin kicks the bill to the curb to concerns about its $1.8 trillion price tag.

It’s a blow to families accustomed to the $250 to $300 per month supplement provided by the Expanded CTC, especially those operating with limited income. October Census data shows that 35 million U.S. families receive new Child Tax Credit payments every month, with many using that dollar for school supplies and childcare. And spiked cases of the COVID-19 variant Omicron will likely add to the economic uncertainty among Americans.

Frustrated at the national level, some lawmakers are shifting focus to state-level child tax credits to provide families with a safety net.

Seven states already have CTCs of their own: California, Colorado, Idaho, Maine, Maryland, New York and Oklahoma, according to National Conference of State Legislatures. Nine other states have proposed child tax credits over the past two years: Connecticut, Hawaii, Illinois, Iowa, Kansas, Michigan, Missouri, Oregon, and Manchin’s dear West Virginia.

While these state tax credits can’t make up for the loss of federal expansion, proponents of state programs argue they’re better than nothing.

Connecticut last year was close to enacting a state child tax credit during its legislative session. State Representative Sean Scanlon (D) told The Daily Beast the proposal was shelved due to expectations that Congress would make the federal CTC expansion permanent.

“I do warn my colleagues and the governor at the time, that we cannot take this lightly. And I think their side weighed in and said, ‘Hey, you know, let’s see what happens. I’m sure everything will work out and we won’t have to deal with this,” Scanlon said on Tuesday.

“And, clearly it hasn’t worked out and we are now three days away from 600,000 children in my state being denied something that is lifting them out of poverty,” he added.

Ahead of Connecticut’s 2022 legislative session, Scanlon said that enacting the state child tax credit would be his top priority, as federal expansion is currently not guaranteed.

Even if Build Back to Better or an expansion of the federal Child Tax Program takes place next year, the state’s policy enactment could be “a step back,” Scanlon said.

“We should do this regardless of whether the federal government continues it or not, because the need is still there,” he said.

One year 2019 report As suggested by the Institute for Economic Policy and Taxation, state securities are also a means of reducing “the multitude of inequalities exacerbated by tax codes in many states,” including by fixing address existing racial inequalities in state tax policy and reduce the tax burden of the poor.

“State legislators… do not need to wait for congressional action to make major strides in lifting thousands to millions of children in their states out of poverty,” the report said.

However, there are limitations to state-level CTCs, whose value simply cannot match the loss of the federal Child Tax Credit expansion.

Jared Walczak, vice president of state projects at the Tax Foundation, said states cannot spend at the same rate as the federal government, and any state child tax credits would likely be targeting specific groups of parents.

Walczak told The Daily Beast: “Trying to make a difference when the American Rescue Act expires extending the Child Tax Credit will be nearly impossible for most, if not all of the survivors. state. For example, Connecticut cannot compete with the value of federal CTC expansion “simply because Connecticut’s income taxes are a fraction of what federal income taxes are,” he added.

Walczak said it’s unclear whether many states will pursue the state-level child tax credit option, given their limited state budgets and tax-cut proposals that must “compete with other state resources.” state”.

“States have to balance their budgets and they simply don’t operate on the scale of the federal government. So they tend to focus more on limiting or examining the benefits in the tax code,” he said.

The limitations of the state’s child tax credits make a wide impact. In California, families earning between $1 and $25,000 a year with children under the age of six can receive up to an additional $1,000 tax credit annual. In Maine, families receive an annual payment $300 tax credit each child is eligible.

But in Maryland, for example, $500 per child credit only available to families with children under 17 years of age with a disability and who are dependent on taxpayers earning less than $6,000 gross annual income — a narrow subset.

However, Jean Ross, senior economic policy expert at the Center for American Progress, told The Daily Beast she believes the now-proven benefits to families receiving the federal CTC expansion will inspire states to consider such policies for themselves. While those credits may be smaller, Ross said “they’re just as important.”

“Seeing all the data coming out on how families use it, we’re seeing research on the benefits of credit, so I expect a lot of interest as the legislatures the state returns to session in the new year,” she said.

Scanlon also hopes his fellow state legislators will join the child tax credit train ride before the 2022 session.

“If we’re not focused on lifting children out of poverty, what the hell are we focusing on?” Scanlon said. “…and at a time when Washington is very depressed, the states really have the ability to lead.”