OKPOLICY.ORG
In this year’s legislative session, it is more important than ever that we respond to the needs of Oklahomans and invest in an economy that works for everyone. For far too long, corporations across the state have enjoyed tax breaks and cuts while 1 in 5 of our state’s children grow up in poverty. Rather than increasing tax benefits for corporations and wealthy Oklahomans, state lawmakers should use the 2022 session to commit to providing economic supports to our children who need it the most. Legislation like House Bill 3353, which strengthens the Sales Tax Relief Credit, is an excellent start at getting working families their hard-earned tax dollars back, while also not depleting funds from our state budget. By investing directly in our people, we’ll be making an important difference in Oklahomans’ lives now and in the future.
The Advanced Child Tax Credit (ACTC) increased economic security for Oklahoma families
Oklahoma families — and our local economies — are strengthened through direct public supports to families in need. We saw this last year when the American Rescue Plan (ARPA) funded a temporary increase in the annual federal Child Tax Credit from $2,000 per qualifying child to $3,600. The credit was also made refundable, allowing many households who previously did not qualify for the credit because their income was too little to receive the credit for the first time. Additionally, the expanded Child Tax Credit was made available in monthly installments instead of one lump sum payment at tax time, giving families the ability to better budget and pay for necessities in real time. For example, a single parent working as a home health aide with a toddler and second-grader received $550 per month with the ACTC. Before this expansion — and if it is not extended — they would only receive $750 per year at tax time. This increase in support and its consistent delivery helped lift an additional 59,000 Oklahoma children above poverty.
| Working Families Were Able to Receive More of Their Tax Dollars with the ACTC | ||
|---|---|---|
| Without the ACTC | With the ACTC | |
| Maximum amount of credit | $2,000/qualifying child | $3,600/qualifying child 0-5; $3,000/qualifying child 6-17 |
| Age of qualifying children | 0-16 | 0-17 |
| Distribution | Lump sum | Monthly payments from July to December 2021 (included an opt-out option) |
| Refundability | Up to $1,400/qualifying child | Fully refundable for each qualifying child |
Oklahoma families still need this help
Even though this federal help has ended, it is still vitally important. Nearly two years into the COVID-19 pandemic, 3 out of 4 Oklahomans with children are still struggling to pay for typical expenses. In 2018, 1 in 4 jobs in Oklahoma were in an occupation with a median wage below the poverty guideline for a family of four. This leaves many Oklahoma families struggling to afford a combination of child care, housing, food, utilities, health care, and more. If the ACTC is not permanently enacted, the maximum annual per-child credit will fall by $1,000 for school-age children and $1,600 for children five and younger. While all families will lose out, this cut will be most significant for children in low-income families. In Oklahoma alone, 114,000 children are at risk of slipping below the poverty line if this expansion is not extended. That’s why state solutions are needed to fill gaps left by federal inaction.
The majority of Oklahomans used the ACTC on essential purchases and investing in their children’s education
Parents know what is best for their children, and the monthly ACTC payment allowed parents to invest money when and where it was needed most. By providing families with consistent monthly help, many families were afforded some relief as they paid their monthly bills. This helped stabilize families and their living circumstances, reducing stress that can impede parents’ ability to care for their children. The vast majority, 92 percent, of low-income households with children in Oklahoma spent some or all of the expanded ACTC payments on essential items, including food, utilities, rent or mortgage, clothing, and educational costs.
Cash payments to families improve Oklahoma’s future
Effective public policy should lift children out of immediate poverty while also improving economic mobility for their families in order to disrupt generational poverty. The ACTC accomplishes both of these things. A letter signed by 462 economists concludes that if the federal Child Tax Credit expansion were made permanent, it would yield tremendous immediate and long-term benefits while having minimal impacts on employment. One in 10 Oklahoma families who received an ACTC was able to save at least a portion of that money, allowing them to invest more in their child’s development now and in the future. Unconditional cash payments are proven to increase children’s educational attainment and can improve their health and human capital in the long-term.
The federal ACTC better positions Oklahoma for greater economic success by bringing in more tax revenue in the future. Tax credits that benefit families, like the Earned Income Tax Credit and Child Tax Credit, are shown to improve future earnings for the children whose families receive them. When families are able to cover all of their monthly expenses and set a little aside in savings, they can spend more in our local economy, generating even more income for businesses across the state. It is already estimated that the ACTC generated more than $18.6 billion nationally in local economies each month. If Oklahoma families always felt this economically secure, our local economies and small businesses would thrive, while state tax revenues would increase.
The Oklahoma legislature needs to improve economic stability for Oklahoma families now
With 460,000 Oklahoma families receiving their final expanded ACTC payment in December, many working Oklahomans are being left without much-needed assistance. With the expanded child tax credit, we saw how public supports for families provided immediate benefits to those who needed it most, including working parents who have done essential work throughout the pandemic as child care workers, cashiers, home health aides, cooks, and delivery drivers. This allowed our state to keep its economy going and provided a much needed boost to our local economies. Ensuring that these individuals can continue to cover their families’ necessary expenses provides peace of mind to parents and caregivers as they raise their children and contribute to our communities. Now that the ACTC has ended, state action on tax credits for working families, like a stronger Sales Tax Relief Credit, is needed more than ever to ensure all Oklahoma families have the resources they need to thrive.
