Among the many issues pending in Congress right now is whether to extend the current Child Tax Credit payments that have been going out monthly since July. Meanwhile, the current high rate of inflation is among the reasons some members of Congress have cited for being reluctant to approve that or other measures that are part of the Build Back Better policy proposals. However, the inflation rate is, in fact, a good reason for approving an extension of the expanded Child Tax Credit.
Inflation is essentially the equivalent of a regressive sales tax, one that hits lower-income people harder than those with higher incomes. Consider the case of a family of four who spends $100 per week – about $400 per month – on food. If that family has an income of $2,000 per month, food takes up 20 percent of the family’s income. But if the family has an income of $4,000 per month, food represents only 10 percent of that. Likewise, such a family with an income of $10,000 per month would spend only 4 percent on food.
Thus, as inflation increases the cost of food, it takes a bigger portion out of the budgets of families with lower incomes than those with higher incomes. If a 5 percent inflation rate raises the monthly cost of food from $400 to $420, that extra $20 represents 1 percent of the income of the family that makes $2,000 per month, 0.5 percent of the family that makes $4,000 per month and just 0.2 percent of the income of the family that makes $10,000 per month.
And that’s just food. Families with children also face other costs subject to inflation, including rent or mortgage payments, clothing, gasoline, auto repairs, insurance, child care and school expenses.
Some people debate whether the high inflation rate is just transitory or long term, but that matters little to people who struggle to keep roofs over their heads, their kids in school and pay their utilities. The monthly Child Tax Credit helps them offset the rising costs caused by the pandemic.
No matter whether inflation is short-term or long-term, the enhanced Child Tax Credit is needed now. Let’s hope Sen. Joe Manchin and his colleagues in Congress will help American families by passing the extension of the Child Tax Credit.
— Brenda Isaac is a Registered Nurse and lives in Charleston, WV. She is a retired school nurse and is an active member of the West Virginia Association of School Nurses.