Scanlon Proposes $600 Child Tax Credit to Bolster Federal Aid

Vice President Kamala Harris visited Connecticut last week to tout the American Rescue Plan, the federal COVID-19 aid bill that will bring billions in funding to the state. 

Her visit came with a particular focus on the new federal child tax credit, which will bring a $3,000 yearly benefit per child between six and 17 years old, and $3,600 per child under six. The credit begins to phase out at individual incomes of $75,000 or couples earning up to $150,000.

“Through this plan, we are going to lift half of America’s children out of poverty,” Harris said, speaking at West Haven Child Development Center. “When children don’t have their basic needs, they cannot perform, and then we have to rush resources from every other system to make up for our failure to invest in them at the earliest stages of their life in the first place.” 

Even before the pandemic, more than 13 percent of Connecticut’s children lived in poverty, or nearly 100,000 children, according to the U.S. Census Bureau. Across the state, the percentage of children living in poverty varies significantly by race: 29 percent of Hispanic children, 27 percent of Black children, and five percent of White children, according to Annie. E. Casey Foundation’s Kids Count Data Center

Harris appeared alongside Congresswoman Rosa DeLauro, D-New Haven, a longtime advocate for federal child tax credits.  

“This is the architecture for the future which we need to build,” DeLauro said. “For me, it is like the New Deal. It is like social security, which lifted 90 percent of our seniors out of poverty. This is what the child tax credit will do.” 

In addition to this federal child tax credit, Connecticut’s state legislators are also working on a long-term child benefit of their own. 

State Rep. Sean Scanlon, D-Guilford, has proposed a child tax credit of $600 per child, for up to three children, for couples earning up to $200,000 per year and individual filers earning up to $100,000. The credit is 70 percent refundable, something Scanlon says is necessary so as not to “leave the most vulnerable behind.” 

“This would impact 853,000 children in Connecticut, which obviously is just staggering to think about, given the fact that we know that a third of all Connecticut children are still living in poverty to this day, which to me, is simply unacceptable,” Scanlon said. 

With the federal credit set to expire after tax year 2021. Connecticut’s plan would show up the year after, in tax year 2022, but would not fully phase in until tax year 2023. Scanlon described the proposal as “the largest tax cut for middle class and working class families in Connecticut history.” 

“If you are a middle class family living in Meriden making the median annual income in Connecticut and you have three children, you’re going to get $1,800 off of your state income tax because of this bill, which is obviously a significant tax reduction for working and middle class families in the state,” Scanlon said. “If the average tax bill for a married family in Connecticut with two children is about $3,100 dollars for state income tax, this would halve that bill to $1,900 dollars. People will certainly notice that.” 

Connecticut is one of four states that lacks “anything really substantial that helps middle class families offset the cost of raising children in the tax code,” according to Patrick O’Brien, research and policy fellow at Connecticut Voices for Children, a research-based advocacy organization focused on issues of equity and family economic security. 

North Dakota and Missouri both tie their tax codes to the federal system, leaving only Pennsylvania and Connecticut with their own income tax systems that do not include tax provisions to offset the cost of raising children. 

Connecticut is one of 28 states to have its own Earned Income Tax Credit, which does offer a child tax benefit, but the income threshold is significantly lower than in Scanlon’s plan. For example, a family of four making $54,000 would not be eligible for the state credit.

O’Brien said that research from Connecticut Voices for Children has found that while other states like New York and California have higher tax rates for the highest earners, the lack of a child tax credit in Connecticut makes this state far more expensive for the median American family. 

Scanlon said the bill is expected to cost between $250 and $300 million each year once fully phased in, and that he plans to include it in the finance committee budget. Speaker Matt Ritter, D-Hartford, said funding this proposal should be a key priority in the budget. 

“We feel very good about our revenue picture here in the state of Connecticut, and that’s even without federal aid,” Ritter said. “It’s also a challenge to our caucus, and to the House and Senate, to the Governor’s Office, to really pick what our priorities are going to be. We did that with welfare liens, we did that with PILOT last month, and I think the child tax credit is another thing we can prioritize and make work with our budget.” 

Scanlon echoed Ritter’s confidence about Connecticut’s fiscal solvency, noting that “we’re looking at about a billion dollar surplus” between the billions in aid from the federal government and new anticipated revenue streams like gaming and legal cannabis. 

But for Rep. Holly Cheeseman, R-East Lyme, the cost of the proposal makes her uncertain about its ability to help families in the long term. 

“We’ve now received a lot of federal dollars, but I don’t want this to become yet another commitment we can’t keep to our families,” Cheeseman said. “We commit to programs and funding and then it’s taken away, time and time again. As worthy a goal as this is, are we as a state committed to funding this in perpetuity?”  

Ritter said the bill would be vital to helping working mothers, as they have been disproportionately harmed by the childcare crisis of the COVID-19 pandemic. According to the Connecticut Data Collaborative, 76 percent of parents who reported needing to stay home and not work due to childcare were women, a problem Scanlon said the child tax credit could go a long way towards mitigating. 

“We know that as the cost of childcare goes up, there’s a lot of families out there that sit down around the kitchen table and say, should I even continue working or is it more cost-effective for me to stay home?” said Scanlon, who is chair of the Finance, Revenue, and Bonding Committee. “That burden is often borne by women, particularly women of color.” 

Between the federal and state child tax credit proposals, Connecticut families could expect a significant reduction in taxes, which Scanlon hopes will make meaningful change in the long run, even if Congresswoman Rosa DeLauro and other supporters in Congress are unsuccessful at making the federal child tax credit permanent. 

“I think we all know the realities of Washington today, it’s a very gridlocked place,” Scanlon said. “This is timed to work in unison with the increase at the federal level and kick in when it expires. Even if Rosa is successful in making the federal program permanent, having a state version will only help people even more.”

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