Skip to content Skip to footer

Research Finds Investment in Permanent Child Tax Credit Would Pay Off 10-Fold

Raising family incomes by $1,000 yearly would cost $97 billion and create $982 billion in benefits, research finds.

Families in the audience listen to President Joe Biden and Vice President Kamala Harris deliver remarks on the day tens of millions of parents will get their first monthly payments from the Child Tax Credit in the South Court Auditorium in the Eisenhower Executive Office Building on July 15, 2021, in Washington, D.C.

New research finds that if the expanded child tax credit were made permanent, the social and economic benefits from the investment would far outweigh the costs of the program.

A working paper from Columbia University, Barnard College and Open Sky Policy Institute researchers finds that if low-income families with one child saw their income increase by $1,000 a year, the benefits would outweigh the cost of the program 10-fold.

While making the program permanent would cost the government $97 billion, it would create social benefits worth $982 billion. These benefits include direct impacts, like improved health and longevity for both children and parents and increased future earnings for the children, and indirect benefits, like lower crime rates. Taxpayers would also benefit, saving $135 billion in total, the research finds.

Working papers are often not yet peer reviewed or edited for publication in a journal. If the paper’s findings are true, it bolsters arguments from advocates of expanding the tax credit that the benefits of the program quite literally outweigh the costs.

Other research has found that the expanded child tax credit from the COVID stimulus bills, which gave families $300 a month for children under 6 and $250 a month for children aged 6 to 17, had a huge impact on the economy. Data released last month found that after the tax credit expired in January, child poverty increased by 41 percent, plunging 3.7 million children into poverty.

The credit came with a number of other benefits; food insufficiency rates decreased, consumer spending increased and the credit helped people keep their jobs, likely helping to pay for high child care costs.

Other surveys also showed that the tax credit was transformative for families. The Census Bureau has found that 91 percent of low-income families spent the credit on necessities, while 92 percent of families said that the payments helped improve their financial stability, according to a poll by SaverLife.

Democrats in Congress had sought to extend the child tax credit by 10 years, or to make it permanent. But conservative Sen. Joe Manchin (D-West Virginia) was vehemently opposed to the program, even though it was helping to keep children out of poverty. Democrats have vowed to keep working to get the proposal passed — but despite their attempts to pressure Manchin on the issue, the senator has been uninterested in discussing it.

Some conservatives have tried reviving the proposal by tying it to work requirements, but advocates say that adding hurdles would only weigh down the program and make it harder for the money to reach families who need it most.

Progressive lawmakers expressed frustration last year as Manchin demanded that they choose between the tax credit, paid family leave or child care funding proposals that were in some versions of the Build Back Better Act.

Some progressive lawmakers have called for reviving the expansion. “Another month without the expanded Child Tax Credit and working people continue to pay the price,” wrote Congressional Progressive Caucus Chair Rep. Pramila Jayapal (D-Washington) on Wednesday. “We have to fix this. Renew it now.”

Help us Prepare for Trump’s Day One

Trump is busy getting ready for Day One of his presidency – but so is Truthout.

Trump has made it no secret that he is planning a demolition-style attack on both specific communities and democracy as a whole, beginning on his first day in office. With over 25 executive orders and directives queued up for January 20, he’s promised to “launch the largest deportation program in American history,” roll back anti-discrimination protections for transgender students, and implement a “drill, drill, drill” approach to ramp up oil and gas extraction.

Organizations like Truthout are also being threatened by legislation like HR 9495, the “nonprofit killer bill” that would allow the Treasury Secretary to declare any nonprofit a “terrorist-supporting organization” and strip its tax-exempt status without due process. Progressive media like Truthout that has courageously focused on reporting on Israel’s genocide in Gaza are in the bill’s crosshairs.

As journalists, we have a responsibility to look at hard realities and communicate them to you. We hope that you, like us, can use this information to prepare for what’s to come.

And if you feel uncertain about what to do in the face of a second Trump administration, we invite you to be an indispensable part of Truthout’s preparations.

In addition to covering the widespread onslaught of draconian policy, we’re shoring up our resources for what might come next for progressive media: bad-faith lawsuits from far-right ghouls, legislation that seeks to strip us of our ability to receive tax-deductible donations, and further throttling of our reach on social media platforms owned by Trump’s sycophants.

We’re preparing right now for Trump’s Day One: building a brave coalition of movement media; reaching out to the activists, academics, and thinkers we trust to shine a light on the inner workings of authoritarianism; and planning to use journalism as a tool to equip movements to protect the people, lands, and principles most vulnerable to Trump’s destruction.

We urgently need your help to prepare. As you know, our December fundraiser is our most important of the year and will determine the scale of work we’ll be able to do in 2025. We’ve set two goals: to raise $100,000 in one-time donations and to add 1300 new monthly donors by midnight on December 31.

Today, we’re asking all of our readers to start a monthly donation or make a one-time donation – as a commitment to stand with us on day one of Trump’s presidency, and every day after that, as we produce journalism that combats authoritarianism, censorship, injustice, and misinformation. You’re an essential part of our future – please join the movement by making a tax-deductible donation today.

If you have the means to make a substantial gift, please dig deep during this critical time!

With gratitude and resolve,

Maya, Negin, Saima, and Ziggy