Yesterday I reviewed how, far from ending without the extension included in Democrats’ trillion-dollar Build Back Better plan, child tax credit payments are about to surge to record levels as Americans file their federal income tax forms. The payouts will be so large they will exceed any prior annual benefits under the program — even without counting the $93 billion in advance monthly installments paid between July and December 2021.

But the continued expansion in these payments is about more than just record dollars paid. Expanded benefits will also continue to be paid to a far larger group of recipients than ever before because these temporary policies have ended the longstanding work requirement and work incentive for collecting these benefits. As a result, millions of parents who didn’t work in 2021 or who did work but not enough to owe federal incomes taxes will continue to receive full benefit payments in the months ahead. Non-workers who have already received six installments of $300 per month per young child will receive another $1,800 — as opposed to no payments at all under prior law. Similarly, part-time workers are about to collect the same full $1,800 per young child — instead of as little as $1 per child under prior law, which gradually increased payments as parents worked and earned more.

Those continued unprecedented payouts to parents who perform little or even no work are so great that they have changed the nature of the entire program. Prior to 2021, the child tax credit program always provided mostly tax relief to parents who worked generally full time and owed federal income taxes. That changed in 2021 with the advent of “fully refundable” payments even to those who don’t work at all. That policy has effectively revived work-free welfare as we knew it and converted the IRS into America’s leading welfare-paying agency. Over 80 percent of the current temporary expansion constitutes higher benefit payments, as opposed to tax relief, meaning the program in 2021 will provide mostly benefit payments to parents who work so little they don’t owe federal income taxes. Another way of saying that is the child tax credit program no longer mostly provides tax relief, contradicting Democrat claims that their policy amounts to “tax cuts for families.” The proposed extension of the current temporary policy included in the Build Back Better plan would perpetuate and ultimately worsen that shift toward benefit payments over tax relief.

If significant benefits will continue to be paid in the coming months to an expanded number of recipients, what changed at the end of December? Simply put, monthly installment payments came to an end, as specified in the March 2021 American Rescue Plan. But those monthly installments – each comprising one-twelfth of the newly-elevated annual benefit — are about to be replaced by a single, larger payment equivalent to six times the prior monthly payments. That’s far from the expanded benefit “expiring,” as some have contended. And that coming surge makes recent White House suggestions for providing “double” payments in February downright bizarre. By then millions of Americans may have filed their tax forms and be poised to receive a payment equivalent to six times the prior monthly installments.

Senator Ron Wyden (D-OR), the Chairman of the Senate Finance Committee with jurisdiction over the child tax credit program, released a December 19 statement reflecting his desire for reviving monthly payments. In it, Wyden noted that “Families received their sixth child tax credit payment last week, and they have come to depend on these payments.” That ably captures some policymakers’ vision for government benefits, which once provided can never be allowed to expire because recipients “have come to depend on these payments.” To them, maintaining that dependence is even more important than the fact that, without further legislative action, these benefits will surge to record highs in the months ahead.

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