February 7, 2022
January marked the first month that families no longer received larger monthly Child Tax Credit payments under a historic one-year expansion of the program in the American Rescue Plan. The payments helped cut New York’s child poverty rate by more than one-third.
Without these payments — an extra $1,000 over the standard $2,000 credit — 681,000 children in New York may fall back into poverty — even as COVID-19 cases continue to surge and everyday costs for families continue to rise. All of this is happening here in a state where, prior to the pandemic, one in five children lived in poverty and Black and Latinx youth were more than twice as likely to be poor than their white peers.
Fortunately, New York can act swiftly to provide urgently needed assistance to many families with children by expanding the Empire State Child Credit in our state budget. We must first expand the credit to include young children under age 4. These children are more likely to live in poverty but remain excluded from the current credit. Second, we must raise the value of the credit to $1,000 for young children and $500 for older children. The current value of the credit, which ranges from $100 per child to up to 33 percent of the family’s federal Child Tax Credit, no longer provides meaningful relief to families.
For example, the U.S. Department of Health and Human Services says that affordable child care should cost 7 percent or less of annual household income. By that measure, fewer than 10 percent of families in New York state can actually afford it, and fewer than 20 percent of New Yorkers eligible for child care assistance get any. The full credit must be made available to New York’s lowest-income families by ending both the exclusion of families with annual incomes under $3,000 and the gradual phase-in for our lowest-income families. Finally, these expansions should be made for all families, and particularly those left out of the American Rescue Plan.
This expansion will help ensure that families can continue to meet the needs of their children despite new challenges created by the pandemic and economic recovery. Too many families in our state are still struggling to pay the rent or keep food on the table.
This credit makes an impact. We know from the successes of the federal Child Tax Credit that four in 10 families nationally used the credits to pay for their rent, mortgage, or utilities. In New York, 48 percent of families spent their credit on food, 38 percent spent their credit on bills, and 34 percent spent their credit on clothing and other essential items for their children. Expanding the Empire State Child Credit will enable more New York families to provide these and other necessities for their children to ensure that they have an opportunity to flourish, no matter their race, immigration status or ZIP code.
The return on investment for this expansion is also significant. Recent research from Columbia University’s Center on Poverty & Social Policy found that expanding the Empire State Child Tax Credit to $1,000 for all children under 17, except for high-income families, would cost $2.7 billion and yield $26.2 billion in returns by way of improved health and economic outcomes, and reductions in crime and government expenses.