How the new child tax credit will help Vermont families
MONTPELIER, Vt. (WCAX) - President Biden signed the American Rescue Plan into law on Thursday. He says the $1.9 trillion relief package will help the U.S. defeat the virus and nurse the economy back to health, including by helping some of the country’s and Vermont’s hardest-hit families.
Economists say the child tax credit in the newly signed law could cut child poverty in half across the country and here in Vermont.
Essentially, it puts cash in parents’ hands to help out with increased costs during the pandemic.
While state leaders are unpacking exactly what this means for families and our economy, advocates are hailing the new initiative.
More relief is coming to Vermont families.
“Increases in incomes, especially to families with low incomes, have tremendous impacts on kids’ lives throughout their lifetimes,” said Michelle Fay of Voice for Vermont Children.
Under the plan, every family will receive monthly payments of $300 for each child under 6, and $250 for each kid 6-17. That means parents could receive up to $3,600 a year per child.
There’s a plethora of uses for this money: bills, rent, food, child care, transportation and more.
Right now, there are about 11,000 kids living below the poverty line.
Michelle Fay with Voices for Vermont Children says this will lift about 4,000 kids and their families out of poverty.
“Dollars coming into families, especially low-income families, are like an amazing investment and a vaccine against future ills,” Fay said.
While Vermont’s economy is opening back up and more people are back at work, there are still some 20,000 out of work.
Advocates say this will help repair the disparity in Vermont’s recovery.
“The impacts on households who have lost jobs and have seen a decline in their income, those will last a lot longer than for other families,” said Faye Mack of Hunger Free Vermont.
Unlike the existing child tax credit and the earned income tax credit, this will provide consistent monthly payments and it’s targeted toward low-income Vermonters, even those on unemployment.
“If you’re not working, you’re not able to earn toward the earned income tax credit, it’s just a top-up on your earnings. What’s great about the CTC is that will benefit families that are or are not employed right now,” said Emily Beam, an assistant professor of economics at UVM.
But this tax credit, however, is only approved for the next 12 months.
Advocates say they view it as a pilot program and hope that the extended program will gain traction among Vermonters and in Montpelier.
This program is part of the stimulus package that passed through budget reconciliation without any support from Republicans in the House or Senate, their main concern being the cost.
Vermont lawmakers tell me that continuing this benefit after the tax credit ends would be a huge lift and that Vermont can’t do it without Washington’s help.
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