The U.S. Census Bureau revealed a concerning trend of the rising poverty rate of American children after COVID-19 pandemic benefits were reported to have run out.

According to the annual poverty report, the poverty rate in the United States has seen a significant increase, and the child poverty rate has more than doubled. The most recent statistics indicate a stark rise to 12.4%, mirroring the overall poverty rate.

This surge coincided with factors such as record inflation and the depletion of pandemic relief measures, but experts and Census officials highlight the pivotal role played by the child tax credit.

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In 2021, the U.S. Congress took steps to bolster this credit as part of the American Rescue Plan, expanding eligibility to include millions of low-income families. Sharon Parrott, the President of the Center on Budget and Policy Priorities, stated this plan having been initially significant to reducing the poverty rate.

“We sometimes talk about the child tax credit as being an upside-down policy,” she says. “That’s because the children who need it the most get the least, while higher income children get more.”

Parrott points out that when the pandemic relief ended, numerous families lost access to the child tax credit. Interestingly, even married couples earning substantial incomes still qualified for the full child tax credit of $2,000 per child. This apparent paradox is explained by the credit’s income-based nature, where higher income leads to a larger benefit.

The additional funds provided through the child tax credit were primarily directed towards essential household expenses such as rent and food, according to surveys. However, many parents utilized these funds to reduce their debts or invest in their children’s well-being.

Critics of extending the child tax credit voiced concerns over potential disincentives for employment and worries that increased federal spending might exacerbate the already surging inflation, which recently reached a 40-year high.

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