Friday, November 26

Child tax credit: poorer families use it to pay off expensive debts

The child tax credit has kept 3 million children from falling into poverty in the US.

Migs Reyes / Pexels

The pandemic, in addition to infections and deaths, has caused severe effects on the American economy and according to information from Bloomberg, the The country’s poorest families are using the new child benefits to get out of debt, many of which accumulated with the appearance of the coronavirus.

Surveys by the US Census Bureau reveal that families making less than $ 50,000 a year are focusing first on paying off their debts.

Payments of up to $ 300 per child, from President Joe Biden’s American Rescue Plan, are a first effort to distribute monthly checks to help families with the expenses of groceries and school supplies, mainly. The administration has indicated that tax credits are a first step to reduce child poverty.

Alex Horowitz of the Pew Charitable Trusts has delved into the topic and found evidence that prior to the pandemic, people used stimulus payments to reduce their dependence on high-cost debt like payday loans.

For the specialist, it is likely that this will happen again: “I don’t know if that was one of the objectives of the child tax credit, but it is likely to be one of your benefits“.

Tanzida Zaman, from Duluth, Georgia, is a project manager and considers herself middle-income. She said she put her $ 300-a-month payments toward medical bills that accrued from last year as a result of “lack of ownership between my two insurance providers.”

“The stimulus and the child tax credit have been a very welcome addition.”said the beneficiary.

According to the data, the monthly aid reflected an immediate economic impact, as personal income increased more than expected in July, with the distribution of the first checks to the families of some 60 million children.

The Center for Poverty and Social Policy at Columbia University revealed that the money helped prevent nearly 3 million children from falling into poverty.

The concern is about the duration of benefits, because aid programs to cope with the damages of the pandemic are decreasing.

A wave of evictions is looming with a federal moratorium ending in October and expanded children’s benefits ending next year, though advocates are calling for them to become permanent.

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