Right now, Congress has before it two major tax policy changes: One would give a tax break to wealthy tech and other corporations, while the other would help hundreds of thousands of West Virginia families and parents of kids across the country make ends meet during a time of rising prices.
Corporate lobbyists are pushing hard, and gaining some traction, for the corporate tax cut to be enacted, while support for families that would put an entire generation of kids on an upward trajectory is stalled in Congress. Let’s be clear: Congress should not prioritize corporate tax interests above children and families.
How did we get here? At the end of 2021, Congress allowed temporary improvements to the child tax credit to expire. The consequences of inaction were costly to West Virginia families, where 346,000 kids and their families were affected — losing income that had been helping pay for education costs and basic needs. Worse, the support was taken away just as inflation, largely caused by supply chain issues and geopolitical crises, spurred price spikes for essentials like gas and groceries.
The child tax credit expansion reduced child poverty nationwide by more than 40%. The greatest driver of these poverty reductions was the expansion of eligibility for kids from families with the lowest incomes — those who need help the most but were locked out of the original child tax credit. There also was a substantial increase in the overall size of the credit. These improvements were a game-changer, providing financial stability for millions of children in families with low incomes.
The corporate tax cut under consideration is an extension of a provision in the 2017 Tax Cuts and Jobs Act that allows corporations to write off expenses related to research and experimentation. Extending this tax cut would cost roughly $150 billion over a decade. And even without this extension, corporations are still reaping the benefits of significant tax cuts under the 2017 tax law.
Both expansion of the child tax credit and the corporate tax cut have been part of an overall tax policy reform package approved by the House of Representatives last year as part of the “Build Back Better” plan. That plan would have raised revenue needed to fund meaningful investments in climate change and support for families — in part by closing loopholes that let corporations avoid paying their taxes, even as it contained pro-corporation policies like the research and experimentation tax credit.
Corporate lobbyists have been hard at work trying to separate the fate of the corporate tax cut from programs that support families like the expanded child tax credit. And they’re close to getting their wish. Lawmakers from both parties are pushing to pass the corporate tax cut alone, either as part of a reconciliation bill that can pass with 50 votes or as part of the COMPETES Act, a bill to improve the United States’ international competitiveness.
This would give corporations their big tax cut while doing nothing for families who are dealing with rising costs and still reeling from the loss of the expanded child tax credit.
We have a responsibility to make sure all kids have what they need right now and in the future. Without congressional action, we are at imminent risk of losing the gains achieved by the expanded child tax credit, with millions of children consigned to poverty, and the long-term harm to health, school performance and future earning potential that results from growing up poor.
In recent months, the West Virginia Center on Budget & Policy has urged West Virginia’s congressional delegation to pass an economic package that helps our state’s families make ends meet, reduces poverty and racial and economic disparities, and lays the groundwork for long-term recovery and prosperity long after the COVID-19 crisis. Now, we are also urging them to say “No” to any new corporate tax cuts without also extending the expanded child tax credit. It’s time to put our families first.
Kelly Allen is executive director of the West Virginia Center on Budget & Policy.