Assembly fails to pass child tax credit plan, despite public support, success

Legislation that would establish a tax credit for families with children failed to pass the General Assembly this session, despite public support and a record of reducing child poverty.

As a part of COVID-19 pandemic relief, the American Rescue Plan Act expanded the federal child tax credit, which benefitted about 1.6 million children in Virginia and reduced national child poverty to a record low. Congress allowed the reformed credit to expire at the end of 2021, but there have been ongoing efforts to reinstate it.

As federal discussions continue, several states are considering implementing a similar tax credit or expanding existing programs. Virginia does not have a state-level child tax credit.

Sen. Jennifer McClellan, D-Richmond, Sen. Adam Ebbin, D-Alexandria, and Del. Kathy Tran, D-Fairfax, introduced legislation for a state child tax credit in the Senate and House. The bills would have established a refundable tax credit of $500 for households making up to $100,000 with dependents younger than 18 years through 2027.

House Repulicans killed one of the bills in January during a finance subcommittee meeting. Senators passed the remaining bill as a study that would be conducted by the Joint Subcommittee on Tax Policy, but a bipartisan vote in the same House subcommittee last week ended its legislative future.

Delegates instead opted to have Chair Kathy Byron, R-Bedford, send a letter asking the joint committee to review and analyze the bill. Republicans who voted against the legislation did not respond to multiple requests for comment.

Although there seems to be support for a study, Republicans are more focused on Gov. Glen Youngkin’s tax proposals, McClellan said in an interview with the Capital News Service. After public education and mental health, McClellan hoped the $3.6 billion budget surplus would go toward struggling families.

The legislation was important amid rising costs and uncertainty in the economy, Tran said. The funding also would have had future ramifications by helping break cycles of poverty, she said.

“The governor’s introduced budget this session provided $362 million in corporate tax cuts for our largest corporations,” Tran said. “And I think what I’m trying to say is we could agree to provide tax cuts, [but] let’s make sure that it is targeted to the people who are most in need.”

For Tran, the legislation was also a personal issue. Along with facing economic strain growing up, her family encountered financial uncertainty when her husband lost his job last fall, she said.

The child tax credit legislation is a more targeted policy compared to Youngkin’s tax proposal, and would cost about $600 million compared to an estimated $1 billion, said Rodrigo Soto, revenue campaign manager at The Commonwealth Institute, a racial and economic justice research and advocacy organization. But there is little room for additional policies in this year’s budget.

Additionally, the profitable corporations and wealthy people benefitting from Youngkin’s plan are not stressed about the rising cost of eggs, but the $500 refundable tax credit per child would have a big effect on families with need, he said.

Despite the failure to pass legislation, Soto expects discussions on a state child tax credit to continue beyond the General Assembly session. The child tax credit is a popular policy among the public, with a survey from last year by Lake Research Partners finding 75% of voters favor the child tax credit, including 86% of Democrats, 77% of Independents and 64% of Republicans.

“It’s obviously going to be something that’s talked about on the campaign trail,” he said. “A lot of people are already talking about this this year as something that they’re championing or that they support. It’s [also] been brought up at the national level.”

McClellan, who won a special election in the Fourth Congressional District on Tuesday, said she would continue to push the issue in Congress.

At the state level, Tran said she would consider reintroducing legislation in future sessions. Supporters knew a state child tax credit wouldn’t be an easy victory, Soto said, comparing the process to years of advocacy that culminated in a reformed Earned Income Tax Credit last year.

“At the end of the day, big, bold, transformative policies sometimes take a little bit more than just one legislative session, especially on a caboose budget year, since this is not the introduction of a new budget cycle,” Soto said.