The 2009 Recovery Act enhanced the federal Child Tax Credit (CTC) to allow low-income working parents to count more of their wages toward the credit. According to CBP analysis of Census data, this resulted in approximately an additional 2,200 West Virginian households (those earning between $9,950 and $12,500 annually) receiving the refundable credit in 2009 (and again for tax year 2010) to better support their children.
While President Obama has suggested that these parameters be extended beyond 2010, Congress has yet to act. Come January, not only will 2,200 households around the state suddenly not qualify for the federal Child Tax Credit (different from the federal Child Care Tax Credit
), many of the ones who still do will receive smaller benefits.
For example, if the improved credit now in effect is allowed to expire, a family with two children in which one parent is full-time at minimum wage will see its CTC fall drastically from $1,725 to $248. And a family with two children will not qualify for a full credit until its annual earnings reach $26,183.
According to a June report
by the Center on Budget and Policy Priorities
, these changes will disproportionately harm children living in rural areas. Obviously, this is bad news for West Virginia's youth, who will be hit harder by this policy change than their counterparts in surrounding states:
Cutting tax credits to working families, just like cutting unemployment benefits, is not going to help the economy. While tightening the purse strings during a recession may seem like the right thing to do, what's prudent in personal finance and what's prudent in public finance are not always the same.