Debunking Democrat Myths About the Child Tax Credit

Good jobs and rising paychecks do more to lift Americans out of poverty than dependence on never-ending government checks. There are a number of factors contributing to poverty. Rewarding work and helping the poor become self-sufficient is the surest path out of poverty.

Democrats historically opposed expanding the Child Tax Credit. In the Tax Cuts & Jobs Act of 2017, Republicans:

• …Doubled the Child Tax Credit to $2,000.
• …Expanded it to more American families and increased its refundability (funding for those without adequate tax liability) to $1,400.
• …Indexed the refundable portion to grow each year.
• Democrats unanimously opposed these increases.

Democrats’ expansion of the Child Tax Credit discouraged work. As part of the nearly $2 trillion partisan American Rescue Plan in March, Democrats in Congress temporarily increased the Child Tax Credit, delivered the checks monthly and increased its refundability.

• While local businesses struggled with a labor crisis, Democrats also eliminated the long-standing requirement for earnings (work), transforming the formerly bipartisan tax relief for working parents into a welfare program for millions of Americans.
• Experts report the Democrats’ Child Tax Credit welfare checks discourages work and ultimately harms families in poverty by reducing overall income levels.

Democrats have repeatedly said they want to make this costly program that crushes Main Street permanent.

• The last quarterly Child Tax Credit checks expire December 15th. Democrats are pushing to extend the welfare Child Tax Credit permanently – starting with a one-year extension in the $4.9 trillion Build Back Better bill.
• Democrats seek to send never-ending government checks to 5 million households with children where no parent is working – creating yet another barrier to work and turning the already dysfunctional IRS into America’s top welfare agency.
• Meanwhile there are 11 million job openings. For every 100 job openings, there are 67 jobless workers. Democrats’ War on Work is threatening our recovery and hurting Main Street businesses.

Here are some of the false and misleading claims Democrats’ will repeat in their push for a dangerous expansion of the welfare state.

MYTH:

Democrats claim the welfare Child Tax Credit has “reduced child poverty by 40 percent.”

FACTS:

• There is no sound evidence to back up this claim. Democrats cite a flawed study by the Poverty Center at Columbia University that assumes all eligible children are enrolled in the program – which they are not.
• In July, a left-leaning organization noted that only 720,000 of the approximately 7 million kids that are eligible but not already registered with the IRS were successfully receiving new child tax credit—and that 90 percent or more of the kids the IRS needed to reach have not been reached.

READ: Working Families Need Good Jobs and Rising Paychecks, Not Government Checks and Tax Hikes

MYTH:

Democrats’ welfare Child Tax Credit is crucial to support children as the country exits the Covid pandemic.

FACTS:

• Studies show that many recipients have used the Child Tax Credit to pad their savings or save for retirement. While commendable, that’s not its purpose.
• A University of Chicago study concluded the loss of earnings by parents no longer required to work would offset the reduction in child poverty.

MYTH:

Democrats’ monthly Child Tax Credits aren’t contributing to America’s labor crisis.

FACTS:

• The University of Chicago published a full research paper that found the welfare Child Tax  Credit expansion would lead 1.5 million workers to exit the labor force – another devastating blow to Main Street businesses struggling to find workers.

READ: No, the Child Tax Credit Doesn’t Reduce Poverty by Half and it Discourages Work

MYTH:

Democrats pioneered the refundable portion of the Child Tax Credit.

FACTS:

• In 2017, Republicans doubled the Child Tax Credit as part of the Tax Cuts and Jobs Act (TCJA) and increased the refundable portion of the credit to $1,400 indexed for inflation.
• In addition to strengthening families’ financial security and encouraging work, TCJA created the first-ever Family and Medical Leave Tax Credit to help businesses offer benefits to their workers.
• Struggling families need good paying jobs, not endless government checks.

MYTH:

The majority of Americans want Democrats’ Child Tax Credit to be permanent.

FACT:  In October, a Morning Consult/Politico poll found that 52 percent of Americans oppose making Democrats’ monthly payments permanent.

BOTTOM LINE: Paying parents not to work and creating more barriers for the jobless to reconnect to a job harms families and the economy. Instead of making the worker shortage worse and driving up inflation, Democrats in Congress should join with Republicans to make the 2017 expansion permanent – including rewarding work by preserving the earnings requirement.