POLITICS: Gather close, Americans, for the expanded U.S. tax credit is about to tell us a tale

By: Isha Shah

On July 15th, 2021, the families of over 60 million children across the United States received their first installment of the expanded Child Tax Credit, a provision of the $1.9 trillion COVID-relief American Rescue Plan. In response to the appearance of anywhere from an additional $100 to $3000 per child in their bank accounts, parents posted joyous TikToks. And of course, talking heads from every corner of the media rushed to laud or lament the change.

 Under the traditional Child Tax Credit, parents with dependent children 16 or under could apply a credit of up to $3,000 per child on their taxes. Its expanded form, however, is different in several fundamental ways that will remain in effect until May 1st, 2022: 

  1. Most notably, the credit will be made refundable: If a family does not file taxes because they do not meet the federal tax-filing threshold, they will receive the amount of the credit as a direct payment. In previous years, the credit was non-refundable, meaning that families that did not file taxes were not entitled to any benefits.

  2. By default, half of the annual credit amount will be disbursed in direct monthly payments for the six months and the other half as a credit on tax-filing day, instead of as a single large credit.

  3. The maximum credit will increase from $3,000 annually per child to $3,600.

  4. Children aged 17 will become eligible for the benefit.

Changes to U.S. federal tax law are neither unusual or infrequent. In fact, the previous three presidents (George W. Bush, Barack Obama, and Donald Trump) passed four major tax bills (the Jobs and Growth Tax Relief Reconciliation Act of 2003; the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010; the American Taxpayer Relief Act of 2012; and the Tax Cuts and Jobs Act of 2017), on top of the changes in exemptions, deductions, tax brackets, and tax credits that occur on an annual basis to account for changes in the cost of living. None of these spawned TikTok memes.  

These changes to the Child Tax Credit represent significant shifts in not only the nuts and bolts of welfare policy — the amount and frequency with which families are paid — but in the philosophical undercurrent that has been guiding U.S. policymaking for decades.

In fact, despite being guided by the same European Enlightenment philosophies during its founding and early years, the U.S.’s welfare policy has evolved into an anomaly among its high-income, western-European peers. Benefits are fewer, stingier, and more disjointed. While the majority of OECD countries have adopted some form of paid family leave, for example, Americans find such securities absent, threadbare by design, or under the aegis of the private rather than public sector — a quirk that goes unnoticed or finds tacit acceptance among a populace who for the most part has never experienced the alternative. 

Further, some claim that our departure? from the European philosophical bloc account for our distinct successes — the rise of U.S. tech companies; the proliferation and influence of U.S. films, movies, books, and other art; the de facto role of the U.S. military in supporting various regimes and relief schemes. So, in the context of U.S. founding principles, the unique trajectory of U.S. moral and cultural development, and current U.S. welfare policy, where does the expansion of the Child Tax Credit fit in? 

Moments of change have the potential to illuminate the forces that have been guiding us, both as individuals and as a nation, and the ones we are turning to instead. This series will explore the expanded Child Tax Credit through several different lenses to answer this question, including not only the dimensions of any traditional policy evaluation — its mechanics, its benefits, its relation to other policies intended to promote the same end — but also in its relationship to the U.S. historical and cultural past. It will explore four different contexts: 

      I.         Part I, the personal: a justification for focusing on policy as an indicator of national philosophy; 

    II.         Part II, the philosophy: an exploration of the philosophical underpinnings of the founding and 19th-century development of our nation as it relates to the idea of a universal child allowance;

  III.         Part III, the policy: a comparison of different types of universal child allowance policies and where the expanded Child Tax Credit lies in relation to them; and

 IV.         Part IV, the politics and logistics: an exploration of the more teleological reasons why the adoption and platforming of a universal child allowance could be both politically and logistically pragmatic.

Tune in each week as The Morningside Post explores a new facet of the expanded Child Tax Credit.