A second bill, on child care, also provides vital supports for families

WASHINGTON—The Economic Mobility Act of 2019 (H.R. 3300), passed yesterday by the House Ways and Means Committee, offers the most important poverty-reducing tax measures in at least a decade for residents of all 50 states, D.C., Puerto Rico, and other U.S. territories. This legislation also takes an important first step toward cutting child poverty in half within a decade: expanding the refundability of the Child Tax Credit and increasing it from $2,000 to $3,000 per year for qualifying children under age four.

“We already know that we can cut child poverty in half within a decade if we only have the political will to make it happen,” said Bruce Lesley, president of First Focus Campaign for Children. “Increasing the Child Tax Credit to $3,000 for kids under four combined with other enhancements in this bill illustrates the kind of federal commitment needed. We applaud Chairman Neal, Congressman Davis, and the Committee for putting children first. We hope Congress will continue to build upon this progress to create a tax code that is more fair and equitable toward low-and-moderate income families and children.”

Changes to the tax code are critical to reducing child poverty. H.R. 3300 would benefit the families and children who most need tax assistance but largely were left behind in the 2017 tax law. In addition to critical expansion of the Child Tax Credit (CTC), this legislation takes positive steps by improving the Child and Dependent Care Tax Credit (CDCTC) and providing matching funds for the Earned Income Tax Credit (EITC) and CTC in Puerto Rico and other U.S. Territories. Families also will benefit from the Committee’s passage yesterday of the Child Care Quality and Access Act of 2019 (H.R. 3298), which increases mandatory child care funding by $1 billion, helping more families afford the child care they need in order to go to work or school.

A recent study by the National Academies of Sciences, called A Roadmap to Reducing Child Poverty, found that increasing the CTC to function as a $3,000 per child peryear child allowance would yield the largest reduction in child poverty — 5.3 percentage points over ten years — and is by far the most effective policy for reducing deep child poverty. The study also concluded that converting the CDCTC to a fully refundable tax credit, concentrating its benefits on families with the lowest income and with children under the age of five, supports parents in the workforce and helps reduce child poverty by 9.2% over 10 years.

The study also supports yesterday’s actions on child care funding. It found that guaranteeing assistance from the Child Care and Development Fund (CCDF) for all eligible families with incomes below 150 percent of the poverty line would help reduce childhood poverty by 0.6 percent, and would increase labor force participation, especially for low-income mothers.  

Children are 62 percent more likely to experience poverty than adults. They also disproportionately experience deep poverty, which severely impedes their healthy development and long-term outcomes. These children are likely to be living in households and communities with characteristics such as racial and income segregation, lower quality schools, and lack of infrastructure, all of which perpetuate intergenerational poverty. Tax credits and benefits designed to reach these communities and families would have positive, long-term effects for child well-being and help to address intergenerational poverty.

“If we want a country that will continue to be strong and successfully compete in a global economy, we must make investments and policy changes that improve the lives and outcomes for all of our children,” Lesley added. “We know that investments in children and education today create jobs for the future, ensuring that they will be prepared to compete and innovate.”