The United States provides big tax incentives to encourage people to work, to buy a home, to save for retirement. But the government provides less money than almost every other developed nation to help people raise children. Last year, the tax credit for buying an electric car was almost four times as large as the tax credit for having a child.
On Thursday, the government began to provide more help, initiating monthly payments of up to $300 per child to most families with children. This is needed assistance for children and parents, and investment in the nation’s future. It’s an overdue adjustment of tax policy to support something obviously important but too often taken for granted.
For middle-class families, it amounts to a welcome but modest boost. Ruth Goyes, 39, who lives in Frederick County, Md., said she struggles to pay for day care for her 5-year-old daughter. The federal money, she said, would cover about a quarter of the monthly cost. “It’s a relief for my husband and myself,” Ms. Goyes said. “I still have to worry about the other three-quarters, but it’s a little bit of help, and I’m grateful for that.”
The same sum may be transformational for many low-income families. More than 10 million American children live in poverty. Analysts estimate that the payments will lift almost half above the poverty line. Everyone is familiar with the standard critique that it’s better to teach people to fish, but the adage overlooks the question of what to eat while learning. Children raised in homes with more resources are more likely to thrive and prosper.
There are, however, two big reasons to refrain from celebrating too much.
First, the program is a trial balloon. It was passed as an emergency aid program, and it ends in a year. Democrats are proposing to tack on a couple of years as part of a spending bill that they plan to pass without Republican support this year. They are gambling that the program will prove popular and that Republicans will then allow it to become permanent. Until that happens, the benefits of the aid are likely to be attenuated because families won’t have confidence the money will keep coming.
The second challenge is reaching the very people who most need the help.
Sending money to middle-class families is easy. Their addresses and often their bank account information are on file with the Internal Revenue Service. The government estimates that 86 percent of recipients are getting the payments by direct deposit.
The government also is distributing the benefit payments to almost half a million families that did not make enough money to file income tax returns in the past two years but that did sign up for stimulus payments during the Covid-19 pandemic.
But the administration estimates more than four million children live in households that are eligible but aren’t on the I.R.S. mailing list.
The new program transforms a tax credit passed in the 1990s that allowed families to reduce their income tax bill by up to $2,000 per child. Families that didn’t owe income taxes didn’t get any benefit. The new program, enacted this year, excludes only high-income families. Everyone else gets the same benefit, paid monthly, of $300 per child under age 6, and $250 per child from 6 through 17.
The sign-up process, however, is unnecessarily difficult. The I.R.S. paid a private company, Intuit, to help create a website to do so that requires an email address, doesn’t work well on mobile phones and is not available in Spanish, among other issues. (The choice of Intuit should have been a red flag: The company is in the business of making it difficult for people to file income taxes.)
The government can do better. In the early 2000s, it mounted a successful campaign to increase the use of food stamps by allowing states, which administer the programs, to make it easier to apply and qualify for them. Participation rose to 85 percent of eligible households in 2016, from just 54 percent in 2002.
More publicity would also help. A poll by the liberal advocacy group Data for Progress found that roughly half of respondents had heard “a little” or “nothing” about the new program.
The Biden administration has publicized the tax credit at a series of political events, including remarks by the president on Thursday. But it has not mounted a concerted campaign to spread the word — unless one counts Vice President Kamala Harris’s urging people last month, “Wherever you run into people — perfect strangers — just go on up and introduce yourself and tell them about the child tax credit.”
On Wednesday, the White House trotted out the pop singer Olivia Rodrigo to urge young people to get coronavirus vaccinations. Maybe she could help to pitch the child tax credit, too.
An administration official said at a briefing on Wednesday that the big issue inhibiting people from signing up for the benefit is distrust of government, which can best be overcome by reaching people through familiar local organizations. No doubt that is an issue in some cases, although it’s hardly an excuse for doing nothing. The government, for example, could provide funding for the nonprofit groups that are independently mounting enrollment campaigns.
There is a difference between celebrating a program as an attack on child poverty and ensuring it helps as many poor children as possible.
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