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America's Child-Tax-Credit Bonanza

In addition to helping millions of American households provide for their children, the monthly Child Tax Credit that went into effect in July represents a massive opportunity for businesses. As every investment banker knows, companies that can boast of reliable “recurring revenue” are worth more than those that cannot.

SAN DIEGO – Stories about vaccination and coronavirus variants are blocking out almost all other news nowadays. But one story, in particular, deserves more coverage. This summer, the United States launched the Child Tax Credit (CTC), a new policy that will shake up traditional relations between the US federal government and American families – from poor households trying to come up with bus fare to affluent ones looking to put money down on a new Tesla.

The CTC, which was included in the American Rescue Plan of 2021, stands apart from most other subsidies because it is a recurring payment, rather than a one-time-only check or an annual credit. In July, the US Treasury began sending monthly direct deposits of $300 per child under six years old to families earning up to $150,000 per year (twice the median family income), and $250 monthly to eligible families with children aged six to 17. If Congress makes the CTC permanent, about 90% of American children would receive a near-$55,000 bonus for the achievement of reaching adulthood. Nor does the program bypass affluent families. Those earning up to $400,000 still receive $167 per child each month.

Opponents of the policy argue that its ten-year, $1.6 trillion bill will inflate the welfare state beyond its Hindenbergian limits. Supporters think the CTC will promote child-bearing and reverse or slow the decline in the US birth rate, which plunged from 2.01 in 2000 to 1.78 in 2020. Moreover, they point out, the monthly disbursements will aid families struggling with mortgage, college, and childcare debt.