New Study Strengthens Case for Expanded Child Tax Credit

The expanded child tax credit, part of American Rescue Plan, provided advanced payments of up to $300 a month to families for each of their children with no restriction on how to spend it. In August of last year, with the credit set to expire at the end of the year, Nurture the Next signed on to a letter calling on Congress and the White House to make them permanent. Yet, as usual, our political leaders decided to put their partisan priorities ahead of American families and allowed the program to expire.

While the program only existed for the last six months of 2021, it transformed the lives of children by lifting millions out of poverty, just as experts predicted it would. Although, a report published this week in an academic science journal shows just how profound a policy like the expanded credits can be.

The study found that providing even a modest amount of money to vulnerable families for a single year changed their babies’ brain activity in ways associated with stronger cognitive development. While the study is just in its first phase, and more testing is required to determine its full impact, these findings are huge. Any program proven to help move the needle on boosting children’s cognitive development should receive everyone’s immediate attention.

As an organization whose work is rooted in the research of healthy child development, we know how critical investments in the first five years of a child’s life are. As an organization that serves every county in Tennessee, we know how serious these issues are to the communities we serve.

According to the Tennessee Commission on Children & Youth’s (TCCY) State of the Child report nearly half of all Tennessee families are struggling financially. Overall, one in five children are currently living in poverty, with almost half of those living in extreme poverty or on less than $12,963 a year. As the report notes, poverty can have “long-lasting and far-reaching” impacts on a child’s life, including, “economic and education achievement gaps that start at a young age and become wider and more difficult to overcome.” It also touts the importance of early intervention in supporting healthy development.

By the end of last year, the credits helped financially support more than 700,000 Tennessee families and made sure that over one million children in Tennessee had their basic needs met. A majority of Tennessee families reported using a portion of the funds to buy food (56%). Rounding out the top five categories were rent or mortgage (36%), school supplies (36%), clothing (34%), and utilities (31%). However, now that the program has expired, one in six of those children are at risk of falling back into or deeper into poverty.

Further inaction is an unacceptable outcome for our children and our collective future.

Before this program began, we knew that when families have economic stability, every indicator of child well-being improves—from educational outcomes to reduced risks for childhood trauma, to their lifelong mental and physical health. Now, backed with tangible proof from the past six months and breakthrough research, we understand just how profound and transformational this economic support can be for vulnerable families.

It’s critical that our leaders in Washington put people before politics and permanently authorize the expanded child tax credit.