The expanded child tax credit, which was part of the 2021 American Rescue Plan Act, played a key role in reducing child poverty. Since then, several lawmakers (both at the federal and state levels) have advocated in favor of making the expanded child tax credit permanent, but with little success. Now, some lawmakers are calling on state and federal lawmakers to expand child tax credits from Maine.
Expanded Child Tax Credit From Maine: Who Will Get It And How Much?
Maine state Rep. Maureen Fitzgerald Terry recently proposed a bill titled “An Act to Improve Economic Security for Maine Children by Establishing the Maine Dependent Tax Credit.” The bill primarily aims to replace the existing dependent exemption tax credit beginning in 2023.
If the new bill is approved, it would expand child tax credits from Maine to $350 for each dependent, compared to $300 from the current credit. Moreover, the bill would make the credit fully refundable, meaning the credit would be retroactively applied to the start of this year.
To qualify for the expanded child tax credit from Maine, the dependent needs to reside with the claimer for six months, as well as get more than 50% of financial support.
Supporters of the bill, including Rep. Terry and families held a rally ahead of the public hearing. The bill was scheduled for a public hearing on Thursday.
What’s The Need To Expand Child Tax Credits From Maine?
Those in favor of expanding the child tax credit argue that it would help to reduce state child poverty by over 12%, i.e., benefitting about 3,500 kids. Moreover, advocates say that expanding the credit would have long-term benefits as well.
Josie Phillips of the Maine Center for Economic Policy says that research has proved that every child tax credit dollar generates about $8 in benefits for society through more education, better health and more lifetime earnings for impacted children.
Opponents, on the other hand, argue that a bigger child tax credit could discourage people from going out to work.
Phillips, however, countered such opposition saying the 2021 expanded child tax credit proved to be a lifeline for families. The credit helped them “weather the financial impacts of the pandemic” and allowed them to meet their “normal day-to-day expenses,” Phillips said.
Further, Phillips noted that the 2021 credit eventually made it “less stressful” for families to “afford things like groceries or rent or childcare that allowed the parents to stay in the labor force.”
In 2021, the federal government expanded the child tax credit to eliminate the minimum income requirement for parents, as well as raised the credit amount from $2,000 per child to $3,000 per child between six and 17 years old and $3,600 per child between 0 to 5 years old.
The child poverty rate is estimated to have dropped to a record low of 5.2% during 2021. In Maine, child poverty dropped by around 40% during the same period.
This article originally appeared on ValueWalk
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