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On Friday, families will go without a monthly deposit from the child tax credit for the first time in over a year, a programme that was supposed to be part of President Joe Biden’s legacy but has instead become a flashpoint over who is deserving of government aid.
Andy Roberts, of St. Albans, West Virginia, relied on the payments to help raise his two young grandsons, whom he and his wife adopted due to the birth parents’ drug addiction.
The Roberts now have a monthly debt of $550. That money went into Girl Scouts, ballet and acting courses, and children’s shoes, which are more costly than adult shoes, according to Roberts. He described the tax benefit as “a gift from God.”
When it comes to losing payments, Roberts says, “it’ll make you tighten up your belt if you have anything to tighten.”
The monthly tax credits were part of Biden’s $1.9 trillion coronavirus relief package, and the president had pushed for a one-year extension as part of a separate economic and social programme bill.
However, Democratic Sen. Joe Manchin of West Virginia, Roberts’ home state, objected to the credit being extended, claiming that the money would discourage people from working and that any further federal expenditure would fuel inflation, which has already reached nearly 40-year high levels.
Last month, 305,000 youngsters in West Virginia received the enhanced credit, according to IRS data.
Biden’s social spending programme was derailed by Manchin’s opposition in the evenly divided Senate, and the enhanced tax credits that were issued in the middle of each month expired in January. This is eroding family incomes just as individuals are dealing with rising prices.
Families, on the other hand, only received half of their 2021 credit each month, with the remaining half arriving when they pay their taxes in the coming months. In 2022, the credit’s amount will be reduced, with full payments only going to families with enough income to repay taxes, a policy choice that will limit the credit’s benefits for the poorest families. Furthermore, the credits for 2022 will only be available until consumers file their taxes at the beginning of the following year.
The Associated Press spoke with West Virginia families who said their groceries and gas prices have increased, and they’ll need to make do with less money than they did a few months ago.
“You’ll have to learn to adapt,” said Roberts, who has spent his entire career as an auto salesman. “Never in your wildest dreams did you imagine everything exploding at once.” You go down to the store and buy a pound of beef for $7-8.”
The enhanced child tax credit and accompanying monthly payments were a policy success, according to the Biden administration’s calculations, paying out $93 billion over six months. In December, the payments were distributed to over 36 million families. Each child under the age of five received $300 per month, while children aged six to seventeen received $250 per month.
Out of worry that automatic government help would drive individuals to quit their employment, Manchin has advocated some type of work requirement for those receiving the payout. However, in a written statement last month, he sidestepped the problem by expressing concerns about inflation and the fact that a one-year extension hid the full costs of a tax benefit that could become permanent.
“My Democratic colleagues in Washington are hell-bent on drastically reshaping our society, making our country even more vulnerable to the threats we confront,” Manchin added. He also expressed concern about inflation and the national debt’s size.
The impact of the credit on employment in the long run is a topic of academic discussion, with most studies indicating that the impact would be statistically small.
Academics studying the tax credit are split on how a permanent programme would impact the economy and children’s welfare.
In an economy with around 150 million employment, Katherine Michelmore, an associate professor of public policy at the University of Michigan, and two other researchers calculated that roughly 350,000 parents would leave the workforce.
One of the most important topics for politicians to consider is whether bureaucrats or parents are better at spending money on children. To avoid transferring money directly to families, Manchin has offered a 10-year, fully financed version of Biden’s economic approach, which would eliminate the child tax credits and instead support programmes like universal pre-kindergarten.
“It’s a moral matter,” Michelmore added, “whether you trust families to make their own judgments.”
Chelsea Woody, a hairdresser from Charleston, West Virginia, is a single mother who works six days a week to help support her family. Her son’s daycare was paid for with the extended child tax credit instalments, and she was able to splurge on clothes for him.
“It really helps a lot.” As she piled groceries into her car, Woody explained, “It’s an extra cushion, instead of me worrying about how I’m going to pay a bill or if anything comes up.” “It’s beneficial to a large number of people. It aids working families, as we are the ones who face the most difficulties. Because I work all the time, I’m rarely at home with my child.”
Boak reported from Baltimore, and Hussein from Washington.
