Many of us are familiar with the American Dream, but lately, more of us are living a much different American Reality. It’s one that looks less and less like the opportunity we were promised, and more and more like another unpaid bill stacked on top of living costs that eat up entire paychecks. This wasn’t what we were promised, and it’s certainly not what we deserve.
That’s why the inclusion of an expanded child tax credit in the American Rescue Plan Act is a game-changer for Colorado families. Advanced for years by Colorado Sen. Michael Bennet, the provision will dramatically increase both the amount of the tax credit as well as the number of households eligible for it. Nearly 90% of Colorado’s children will benefit from the expanded child tax credit. Now, we must work to make this change permanent.
No matter where we come from, our color, or what we do for a living, Coloradans work hard for their families. Long before the COVID-19 pandemic families faced rising costs of living and non-livable wages, but today Black and Brown communities have borne the brunt of the economic emergency created by COVID-19. While those at the top recover more quickly, too many people who earn low incomes have been the most likely to be laid off or risk their health working on the front lines.
For those of us with children, it’s an even harder reality to face as child care costs continue to climb. According to the Economic Policy Institute, the average cost of infant care in Colorado is just above $15,000 per year. The average cost of child care for 4-year-olds is nearly $13,000, and if you’re like many who juggle both a toddler and an infant, the Economic Policy Institute goes on to point out these combined child care costs amount to 50% more than the average cost of rent in our state. And when you struggle to afford what’s in front of you, the prospect of saving for the massive and critical expense of higher education later is just too much.
Jacob Hayes, a father and member of the Colorado People’s Alliance, knows this all too well. From child care to food and housing security, his family relies on the child tax credit to not only get by but provide for his children’s future. “With one in eight Colorado children already experiencing poverty before the pandemic, now is the time to implement proven solutions to give our children a better life in this difficult time and going forward,” Hayes said. “These efforts would provide relief to all Colorado families in need regardless of what identification number they use when they file their taxes.”
The Child Tax Credit, which was previously worth up to $2,000 (but only $1,400 was refundable), is now worth $3,000 per child between the ages of six and 17 for families who make up to $70,000 per year for an individual filing and $150,000 for a married couple filing jointly. The tax credit provides $3,600 per child under the age of six. By making the tax credit fully refundable, the full amount will go to lower-income households for the first time ever and benefit 350,000 more children in Colorado.
While this is an important step in addressing economic inequality for individual families, it also moves our country toward a more equitable future for all: Of the 10 million children across the nation who would be lifted to or above the poverty line by this tax credit, over six million are Black or Latino.
For over five years, U.S. Sen. Michael Bennet, of Colorado, has pushed for this legislation across our state and country. In that time, his idea for an expanded, fully refundable child tax credit has gained support on both sides of the aisle and in our own state House.
Colorado’s state legislature recognized just how important it is to help families in our tax code by creating the child tax credit at the state level in 2013. Unfortunately, in a state still trying to close massive funding gaps in education, transportation, and other vital areas, funding has never been found to fully fund this valuable tax credit.
But that could all change this year. In his State of the State address, Gov. Jared Polis signaled his support for a historic change to our tax code, expanding the earned income tax credit and fully funding the child tax credit by closing outdated tax loopholes that benefit big corporations and our wealthiest residents. In forthcoming legislation sponsored by state Rep. Emily Sirota, we have a real shot at amplifying federal tax credits in our state tax code, delivering real relief and tax fairness to hundreds of thousands of Coloradans.
Much of the momentum toward these two policy innovations is due to the economic emergency created by COVID-19, but we know these economic challenges have festered for a long time and will continue well past this public health crisis. This kind of expansion is desperately needed in an economy where definitions of poverty, self-sufficiency, and middle class have changed dramatically, and not for the better.
The expanded child tax credit included in the American Rescue Act only lasts until 2022. We call on community and political leaders to not only support our efforts at the state legislature to fund the Colorado version of the child tax credit and expand the earned income tax credit, but demand Congress make relief for hardworking families a full-time feature of our nation’s tax code. Let’s all do our part to help get this across the finish line.
Lizeth Chacon is the executive director of the Colorado People’s Alliance. Carol Hedges is the executive director of the Colorado Fiscal Institute. Scott Wasserman is the president of the Bell Policy Center.
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