After getting elected to Congress in November, Ritchie Torres made his top priority expanding the child tax credit — touting it as the biggest potential boost for his South Bronx constituents.
Now his wish is about to become reality, at least for a year, as the measure he championed as an incoming freshman representative is about to be included in the $1.9 trillion federal aid bill being pushed through Congress.
“There is bipartisan and bicameral support so I am as optimistic as I can be given how erratic Washington can be,” he told THE CITY on Saturday.
The aid bill, labeled the American Rescue Act by Torres’ fellow Democrats, would increase the tax credit from a maximum of $2,000 for children under 17 to $3,600 for a child under the age of 6. The amount would rise to $3,000 for children ages 7 to 17.
More significantly, it would make the entire amount refundable no matter what a person’s taxable income is. Under the current law, the credit increases with earnings so a single parent with two children has to earn more than $30,000 a year to collect the full amount.
The numbers are striking: According to estimates from the Center on Poverty and Social Policy at Columbia University, childhood poverty in the South Bronx, frequently described as the poorest urban congressional district in the country, would be slashed to just over 20% of all children from 45%.
Overall childhood poverty in New York City would decline to 12% from about 21%. The statewide figure would fall under 10% from 15%, according to the center, which has been studying the issue for five years.
The poverty rate in 2019, the last year for which statistics are available fell to 16% down from 21% five years earlier. In all about 450,000 New York City children were living in poverty pre-pandemic, defined as a family of four with an income of less than $32,000.
“It’s going to be a game-changer for the Bronx, New York City and the country,” said Emerita Torres, vice president for policy, research and advocacy at the Community Service Society of New York.
‘I Would Benefit a Lot’
However, to be fully effective the expanded credit would have to not disqualify recipients for other benefits — and would need to be turned into a monthly stipend rather than a once-a-year lump sum as an income tax refund, supporters argue.
They also contend the one-year-only credit would need to be made permanent despite conservative opposition claiming the increase would reduce the incentive to seek work.
Torres’ 15th Congressional District illustrates the role the child tax credit plays in the lives of low-income New Yorkers, many of them Black or Hispanic.
“There have been families that come to our tax preparation centers and we say this is how much you are going to get,” said Karla Velasquez, who runs the financial empowerment center for the nonprofit BronxWorks. “They say, ‘Thank God, because I didn’t know how I was going to pay the rent or buy food.’ Some people even say I can help my daughter and son pay for the costs of school.”
In her experience, most of the families she works with save the money they receive and use it to make ends meet throughout the year. Her program helps more than 5,000 families prepare their taxes through in-person and drop-off options paid for by the city Department of Consumer Affairs, as well as a new online service sponsored by Montefiore Hospital.
One client, Ashley Garcia currently receives about $2,000 a year. She is a Head Start program teacher earning about $21 an hour, but that isn’t sufficient to qualify for the maximum amount for her two children, ages 4 and 11.
Her hours were reduced due to the pandemic, leading her and her children to move in with her mother and sister on Prospect Avenue in the South Bronx.
Under the proposed child tax credit expansion, which would allow her to qualify for the full benefit despite her modest income, she would receive $6,600.
“I would benefit a lot because I am saving up to get enough money for an apartment,” she said.
Supporters say the impact of the increase goes beyond helping people pay their bills.
Research by Columbia shows that raising the child tax credit results in long-term gains in earnings, improvement in health, longevity and infant mortality and reductions in criminal justice and welfare interactions.
‘Close to an Equalizer’
For many, the unresolved question of whether the credit will continue to be a lump sum available only after a tax return is filed or transformed into a monthly stipend paid in advance is key.
“I would prefer the monthly amount to help with buying food and necessities for my children,” said Garcia, who would get about $550 a month. “And my daughter is growing, so she is going to need more clothes.”
If the payment is monthly, it will need to be exempted from income or it could cause recipients to lose other benefits like Section 8 housing vouchers or SNAP, experts agree.
‘A decent society should be dedicated to eradicating poverty among children and seniors.’
Also crucial is whether the expansion can be made permanent by passing The American Family Act reintroduced in the House this month by Democrats Rosa DeLauro of Connecticut and Suzan DelBene of Washington. Torres joined them as the third leading cosponsor.
Some Republicans, including Sen. Mitt Romney of Utah, have backed the concept behind the credit. Others are mobilizing opposition — among them Florida Sen. Marco Rubio, who denounced Romney’s plan as “not tax relief for working parents” but “welfare assistance.”
Rubio had been a prime mover in increasing the credit to $2,000 from $1,000 in the 2017 Trump tax cut law. But that move was structured to mostly benefit middle- and higher-income families.
Torres plans to counter opposition by emphasizing the economic impact of a permanent expansion and the need to deal with the inequities that have been widened by the pandemic recession. He likens the move to Social Security and Medicare, which have allowed many seniors to escape poverty.
“The American Family Act would provide economic resilience in the South Bronx in the face of cataclysmic events like COVID,” he said. “It is as close to an equalizer as we can get. A decent society should be dedicated to eradicating poverty among children and seniors.”