What would help families make ends meet? Make the Child Tax Credit permanent

Congress has an opportunity to help Montanans not only recover from the effects of the coronavirus, but to create a nation that includes everyone in its growing economy. Now is the time to address the challenges faced by Montanans, especially Montanans living on low-incomes and Montanans of color. We have the opportunity now to rebuild a stronger country, if Congress makes permanent its changes to the Child Tax Credit.

The Child Tax Credit (CTC) can drastically and permanently reduce childhood poverty and hunger. It can also begin to address racial injustices in our tax code if the changes made earlier this year become permanent.

This summer, families received much-needed support through a one-time expansion of the CTC. The effects have been immediately noticeable – food insecurity has dropped, and families are better able to afford childcare.

Over 9 out of 10 children in Montana will benefit from the expansion. A permanent expansion of the CTC could reduce childhood poverty by 45 percent, meaning 10,000 fewer children in Montana would live in poverty. For families of color, who have long felt the burden of a discriminatory tax code, the changes could reduce child poverty even more. Up to 55 percent fewer children of color will live in poverty if Congress permanently expands the CTC.

New, temporary changes to the CTC benefit families.

Before the American Rescue Plan Act (ARPA), the CTC was $2,000 for children 16 years and under. For the first time, the CTC includes 17-year-olds. Under the ARP, the CTC amount for children under 6 is $3,600, and for children aged 6 to 17, $3,000. Starting July 15, families began receiving monthly payments and will continue to receive them through the end of 2021. For each child under 6, this means a monthly check of $300 and $250 for those aged 6 to 17.

These credits can help significantly reduce the cost of raising children. For parents with a four-year-old, $300 a month can help cover roughly 40 percent of average monthly childcare costs, or it could equal up to a month’s worth of food for a child. Parents could also pay for other needs and opportunities, like new shoes or music lessons.

But while the dollar increase in the CTC has made the most headlines, it is not the only significant change.

Prior to this summer, the CTC was not completely available to families living on the lowest incomes. In the past, families did not receive the full tax credit if the amount they owed in taxes was less than the total credit. This meant higher-income families received a larger credit than families living on the lowest incomes.

For this year only, however, the tax credit is “fully refundable,” meaning families can receive the full amount, even if the amount they owe in taxes is less than the total credit received. This is a vital change for those families who need it the most and will be able to benefit from the full credit for the first time.

The refundability of the CTC reduces historical racial injustices.

American Indian families have suffered the consequences of discriminatory policies for generations. For example, the forcible transfer of land from American Indians to non-Indians in the late 19th and early 20th centuries destroyed opportunities to build generational wealth, creating lasting impacts today. American Indians have, and continue to be, discriminated against in education, housing, and employment opportunities, pushing many families into poverty. Due to inequitable policies, American Indians living in Montana experience poverty are 2.5 times more likely to live in poverty than white Montanans are.

Our tax code has doubled down on these injustices, as families living on the lowest incomes have not been eligible to receive the full CTC. This discrimination against those living on low incomes has served to perpetuate a cycle of poverty. But because the CTC is refundable for the first time, families living on low incomes can receive the full credit this year.

Refundability of the CTC is essential for families of color. Nationwide, the CTC expansion would lift 124,000 American Indians and Alaska Natives above the poverty line and 156,000 closer to the poverty line. In Montana, poverty for children of color would be reduced by 55 percent each year if these changes in the CTC were made permanent.

The CTC provided immediate impact and helped rural communities.

Food insufficiency in households with children dropped the week after families received the checks. Nearly half of respondents in a Census survey reported spending the credit on food. The CTC also helped families afford childcare – 17 percent of respondents with children under the age of 5 spent the credit on child care. With Montana facing a critical childcare shortage, the changes to the CTC can help more families afford quality care for their children.

As families spend their tax credit on their most urgent needs, they simultaneously stimulate their local economies, generating jobs and state and local tax revenue. The CTC provides a substantial benefit in rural states, like Montana, with smaller incomes and larger family sizes. The total expanded CTC, which brings in over $824 million to the state, could create 2,156 median wage jobs.

Refundability of the CTC should be permanent.

The changes to the CTC, including the increased benefit, expanded ages, and refundability, benefit over 90 percent of Montana children. But while the CTC has long been a source of support for families, the fact that families living on the lowest incomes could not receive the full credit especially children of color.

Allowing the CTC to return its previous state of non-refundability would discriminate against families of color who were driven into poverty by racially motivated discriminatory policies, like the forcible transfer of land and the underfunding of tribal colleges. Congress should act to make the refundability of the CTC a permanent feature to take steps in correcting this historical injustice.

Broadband: Expanding the Digital Road in Indian Country

For decades, quality access to the internet has been important for businesses, schools, and communities. However, the global pandemic has made apparent the stark difference in access -particularly in Indian Country. Broadband is a digital road, and like most roads, they take us to places like work, school, the doctor, and stores. They also bring important goods and services into a community. The past year has dramatically increased our reliance on these digital roads. However, for Indian Country, barriers exist, and much of Indian Country has lacked the funding for broadband infrastructure. These challenging times brought a push and opportunity for funding which will be critical for Indian Country to build for the future.

First, it is essential to understand what broadband means. The term broadband refers to high-speed internet access that is always on and faster than traditional dial-up access. A recent national survey by HighSpeedInternet.com showed the net result of Montana on average having the slowest internet of all states, with roughly half the speed of the national average. Broadband access depends on many factors, including whether you live in a rural or urban community. Rural areas, especially tribal lands, lack broadband coverage the most.

Tribal lands often present significant obstacles to implement broadband and are expensive to serve. These challenges on tribal lands include rugged terrain, complex permitting processes, jurisdictional issues involving states and sovereign tribal governments, lack of the necessary infrastructure, and a majority of residential rather than business customers. Higher population density and more business customers incentivize broadband providers to invest in urban communities where they will receive more returns versus spending hundreds of thousands of dollars to serve a few customers in a rural area. With 84% of tribal citizens living in rural and small-town areas of Montana, these populations are more directly impacted by inadequate speeds and access to broadband coverage.

Fortunately, there is some hopeful news.

The federal American Rescue Plan Act (ARPA) brought significant funding to Montana. The legislature set up interim committees to appropriate more than $2 billion in federal funding through HB 632 and designating $275 million of that funding for broadband-related projects. The funding from HB 632 will work through SB 297, creating a grant program to award broadband providers with funding to deploy broadband projects in frontier, unserved, or underserved areas. Tribal and local governments may partner with broadband providers to fund these projects.

Previously, in February 2020, the Federal Communications Commission opened a six-month period in which federally recognized tribal nations or Alaska Native Villages could apply for a broadband license to provide broadband service on tribal land. In Montana, seven out of eight tribal governments received a license. Previously tribal nations had to compete against giant internet service providers with vastly larger capital and staff with technical skills in bidding for the license.  Tribal governments can lease these licenses. However, having their own license and managing their own infrastructure will mean adding high-skilled, high-paying jobs in their communities. Tribal nation’s autonomy over spectrum licensing strengthens tribal sovereignty by increasing the authority of tribal nations to manage their internet just as they would a natural resource, like water or mineral rights. While tribal governments expect to receive these licenses and some federal funding, it is still only a fraction of what is needed to cover all the costs. That is why state funding from SB 297 is a critical component to make this plan a reality.  

Broadband is an essential part of infrastructure interconnecting all other industries. Every industry relies on computing, cloud storage, or other digital equipment to sell goods and services. In a pandemic that is disproportionately impacting Indian Country, accessing the internet has become increasingly vital for maintaining and improving essential things like physical and mental health outcomes, employment rates, school enrollments, and social connections. The necessity for broadband is overwhelmingly clear as we continue onto this road into the future —a road towards investment, equity, and development in Indian Country.

Check out the MT broadband deployment task proposal here.

MBPC’s Comment on the 1115 Waiver Amendment

Last week, Montana Budget & Policy Center submitted our comments in relation to the proposed amendment to Montana’s 1115 demonstration waiver for the Health & Economic Livelihood Partnership (HELP) program, as well as, the proposed 1115 demonstration waiver for Montana’s basic Medicaid program (which DPHHS has referred to as the Waiver for Additional Services and Populations, or WASP).

As one of several organizations working to expand Medicaid in Montana, MBPC supported the Health and Economic Livelihood Partnership (HELP) Act, passed by the Montana Legislature during the 64th Legislative Session. As of July 1, 2021, over 100,000 low-income Montanans were enrolled in affordable health care coverage. This effort has moved Montana closer toward closing the coverage gap, has reduced uncompensated care, and has injected billions in taxpayer dollars into our local economies. MBPC urges the Department to consider the impact that more frequent determinations will have on Montanans. Twelve-month continuous eligibility has proved to be a success in Montana..

To read our submitted comments, download the PDF here.

Wealthiest Should Finally Pay their Fair Share

A recent investigation found that many of the wealthiest Americans pay little to no income tax each year while tens of millions of middle-class people have it withheld from every paycheck they receive. Those who use their income to buy groceries, school supplies, and pay for housing pay a much higher tax rate than those who have endlessly expansive resources.

Our current federal tax system is unfair, and we are encouraged by recent efforts to make sure those at the top and large corporations are paying their fair share, to invest in critical needs that will help families struggling, like housing, education, and child care.

Much of the income of the wealthy comes from gains in the value of stocks and other assets, and if assets are held onto, taxes are avoided. When the wealthy are required to pay taxes on the income from these assets, such as capital gains and dividends, they pay at tax rates that are far lower than the tax rates they would pay on wages and salaries.

The tax breaks and loopholes that make this tax avoidance possible have been expanded in recent years, including in the 2017 federal tax reform, increasing the already rampant disparities in incomes across race and class.

Montana’s state and local tax codes worsen the economic and racial inequities by asking taxpayers with lower and middle incomes to pay a larger share of their income in taxes than the wealthiest taxpayers.

We as a nation have a serious need to rebuild infrastructure and address glaring economic and racial inequities that have been named and grown during the COVID-19 pandemic. Luckily, fixing the flaws in the tax code that allow the wealthiest to avoid taxes would provide much-needed revenue to address our infrastructural needs and invest in our communities.

Federal lawmakers should make the following reforms to make sure the wealthy contribute to much-needed public investments. These reforms would only affect households with incomes in excess of $400,000.

  • Tax capital gains that have escaped taxation at the end of an individual’s lifetime.
  • Eliminate lower tax rates on capital gains and dividends for those with incomes over $1 million, taxing that income at the same tax rate as salaries and interest, and eliminating the deduction for pass-through income created in 2017. A new tax on the incomes of millionaires should also be strongly considered.
  • Bolster other taxes, such as the corporate income tax and the estate tax, which fall most heavily on the wealthiest households. Increase the corporate tax rate to 28 percent and make changes to the tax code to address the longstanding and rampant use of tax havens.

These proposals, together, represent a modest step in the direction of greater tax fairness.


The ARPA Commission needs to make housing an integral part of Montana’s post-pandemic recovery plan

Montana communities across the state are facing significant housing shortages, particularly for households living on lower and moderate incomes. The pandemic brought more attention to this ever-worsening crisis, as families struggle to find a safe, stable, and affordable place to live, employers struggle to hire and keep workers, and communities grapple with growing issues of homelessness. On Wednesday, July 21, the ARPA Economic Transformation and Stabilization and Workforce Development Advisory Commission will meet to discuss upcoming recommendations by the state administration on the use of flexible state COVID relief funds. The Montana Budget & Policy Center, together with 40 organizations, housing providers, and developers as part of the statewide Montana Housing Coalition, submitted a letter urging the state to invest a minimum of $40 million of flexible state fiscal relief funds into the construction and preservation of affordable housing.

Of this $40 million, we urge the Department of Commerce to dedicate at least $30 million in grants for direct financial assistance to fill funding gaps and reduce total development costs for housing projects. These grants will be similar to Community Development Block Grants (CDBG) and Housing Development Partnerships Program (HOME) administered by the Montana Housing Division. The Department can prioritize grants used to:

  • Purchase existing housing to convert to affordable housing; provide preconstruction technical assistance for affordable housing projects; and comprehensive rehabilitation and preservation of existing affordable housing;
  • Match federal, local, and other funding sources; and
  • Provide equity to housing projects that have applied for federal Low-Income Housing Tax Credits but not awarded due to lack of funds and located in communities disproportionately impacted by the pandemic.

Additionally, we urge the Department of Commerce to dedicate at least $10 million in grants to nonprofit housing partners and service organizations for housing and facilities necessary to provide safe shelters and supportive housing. The Department can prioritize grants used to:

  • Rent, acquire, and renovate existing facilities and convert underused hotels, motels, and other properties to shelters and supportive housing; and
  • Provide families at risk of or experiencing homelessness and for survivors of domestic violence.

Check out the full letter here. Montana’s State Fiscal Recovery Funds gives the Department of Commerce an unprecedented opportunity to tackle our state’s acute shortage of available and affordable housing and, by doing so, build stronger, resilient communities. We hope Montanans will make their voices heard and urge the ARPA Commission to make housing production an integral part of Montana’s post-pandemic recovery plan.

State must act immediately to prevent large SNAP cut from hurting Montanans

At the end of June, Governor Gianforte announced the termination of Montana’s state of emergency. This move effectively ends emergency Supplemental Nutrition Assistance Program (SNAP) benefits for over 46,000 Montana households. Unless the Governor and the Department of Public Health and Human Services takes immediate action, thousands of Montanans living on low incomes are at risk of a substantial cut in their food assistance.

Emergency allotments have helped thousands during uncertain times.

Montana ranks above the national average in numbers of adults and children reporting food insecurity. The health and economic consequences of the COVID-19 pandemic have made affording food substantially more difficult for individuals living on low incomes. An estimated 84,000 adults in Montana report the household did not have enough food to eat in the last week. For families with children, the crisis is even greater – 30,000 adults living with children report the children in the household did not have enough food to eat.

Substantial increases in food prices have made it even more difficult for families and individuals living on low incomes to afford food. Food prices have climbed 5 percent since May 2020 and are expected to continue rising through 2021.

Emergency allotments (EAs) are a temporary increase in SNAP benefits to help households living on low incomes weather the COVID health crisis, a volatile job market, and an unequal economic recovery. This additional benefit raised each household’s SNAP benefits to the maximum benefit for their household size, supporting those hit hardest by the pandemic. For a state to receive emergency allotments, the state must either have a state of emergency in place, or an equivalent declaration approved by the USDA Food and Nutrition Service (FNS).

Montana households will lose nearly $100 a month in benefits. Some will lose even more.

Emergency allotments have been the largest source of pandemic related food assistance for people receiving SNAP benefits. With EAs, every household received at least $95 per month as of April 2021.

Some households will lose even more. For example, a senior who had been receiving the minimum SNAP benefit prior to the pandemic would now be receiving $234 with emergency allotments (as well as a 15 percent increase in SNAP benefits that USDA issued) each month. If emergency allotments end, they will find their benefits reduced to less than $20.

SNAP benefits have long been inadequate in addressing hunger. Even with the additional benefits the average per-person per-meal benefits is only $2.53. Without emergency allotments, families would be left with only $1.60 per person for each meal.

Emergency allotments strengthen Montana’s economy.

A loss in emergency allotments will create unnecessary hardship for over 46,000 households in Montana. This move will not only make it difficult for families to put food on the table, but will also endanger Montana’s post-pandemic economic recovery as the state loses $8 million a month in federally-funded assistance.

SNAP has long been one of the most effective ways to support the economy during financial crises, with every dollar spent in SNAP generating up to $1.50 in economic activity. Emergency allotments generate up to $12 million in economic activity every month, supporting local stores, businesses, and farmers across the state.

SNAP serves as a vital work support, with four out of five households having one or more individuals who worked within the last year. The majority of those who are not currently employed are children, elderly, or disabled. Nearly half of SNAP households in Montana (48 percent) have children, and 47 percent of households include one or more individuals living with a disability. Nearly one-third of SNAP households have an individual over age 60. These households, who were hard hit by the pandemic, rely on emergency allotments to meet their nutritional needs in the face of spreading COVID variants and rising food costs.

The state has options to preserve expanded SNAP benefits for struggling Montanans.

Several states that have ended their initial state emergency declaration, including Utah, Wisconsin, Oklahoma, Kansas, and Minnesota, are still issuing emergency allotments. FNS has signaled it is willing to work with states who have ended their emergency orders to ensure individuals are still receiving the boosted SNAP benefits. Even though Montana is no longer in its initial state of emergency, the state still has the ability to retain emergency allotments.

Last week, Montana Budget & Policy Center, the Montana Food Bank Network, and 27 other organizations around the state, including food pantries and faith groups, sent a letter to the Governor’s office and the Department of Public Health and Human Services asking the state to work with FNS preserve SNAP benefits for Montanans. As the state moves towards the next phase of pandemic recovery, it is essential to preserve help for those who are most in need of support.

Child Tax Credit Awareness Day

The child tax credit is a federal tax credit that provides relief for nearly all working people with children, lifting many families above the poverty line. For 2021, the child tax credit has been increased from $2,000 per child under 17 to $3,000 for each child between the ages of 6 and 17 and to $3,600 for each child under 6.  The credit has also been expanded to be fully refundable, meaning that children whose parents didn’t have enough earnings in a year to claim the full tax credit previously will receive the full credit in 2021. In Montana, 91 percent of children under 18 (209,000 children) will benefit. These changes are expected to reduce child poverty in Montana by 45 percent, by lifting family income above the poverty line.

Beginning July 15, the IRS will begin sending advanced monthly payments of the child tax credit. While payments will differ for different family situations, in general, for each qualifying child under 6, families will receive $300 monthly. For children ages 6 to 17, each family will receive a monthly payment of $250. The remaining half of the credit will be received when 2021 income tax returns are filed.

Am I eligible for the credit?

If you filed a 2019 or 2020 tax return and claimed the child tax credit on the return, live in the US for at least half the year, and have a qualifying child who is under 18 at the end of 2021 with a valid social security number, you are eligible for the credit.

The child tax credit expansion begins phasing out at incomes of $75,000 for single filers, $112,500 for single filers with dependents, and $150,000 for joint filers.

What should I do to receive advanced payments?

If you have filed your 2019 or 2020 taxes, you don’t need to do anything. If the IRS has your banking information on file, they will automatically deposit your monthly advance of the child tax credit. For filers without banking information on file with the IRS, the IRS will issue checks for advanced payments of the credit.

For families that do not file income taxes, the IRS has released a tool to submit your information to receive the automatic payments. Sign up now.

Can I decline the advanced payment?

For families that prefer to wait until they file their 2021 income taxes to receive the additional credit, the IRS plans to release a tool in the coming weeks to unenroll from payments.

How long will the credit expansion last?

The child tax credit expansion is currently only in effect for 2021.

End of Session Tax Bill Round-Up

Montana’s path to economic recovery and future prosperity is dependent upon the state budget, made up with tax revenues. While MBPC helped kill numerous tax cut bills that would have resulting in over $900 million in lost revenue each biennium, once fully phased in, the 2021 legislature passed tax cut bills that will cost over $100 million in lost revenue each biennium.

Individual Income Tax

The largest revenue losers were individual income tax cuts, packaged together as SB 399 and SB 159. SB 159 lowered the top income tax rate from 6.9 to 6.75 percent until tax year 2024. This tax cut primarily benefits the wealthiest, with over 80 percent of the tax cut going to the top 20 percent of Montanans.

SB 399, which goes into effect as SB 159 phases out, drops the top income tax rate even further to 6.5 percent. As a result of this bill, there are over 100,000 Montanans, spread across the income spectrum, who will see tax increases. This bill also opens Montana’s tax system up to additional volatility by increasing the number of provisions in the federal tax code that Montana’s tax system is tied to. In part to these volatility concerns, only 5 states remain that tie into the federal tax code in the same way as SB 399. This bill moves Montana in the wrong direction.

In addition, SB 399 eliminates 17 tax credits with little opportunity for the legislature to consider the merit of each credit. While tax simplification is a laudable goal, more forethought is needed for an efficient tax system.

Business Equipment Tax

Another costly bill was HB 303, which increased the property tax exemption for business equipment tax. Business equipment tax has been cut numerous times in Montana’s recent history.

As a result of these changes, the numbers of businesses paying business equipment tax have dropped from over 36,000 in 2000 to less than 9,000 before the passage of HB 303. Homeowners in Montana have seen their property tax obligation grow in relation to owners of business equipment in the last 20 years.

In the end, the 2021 legislature passed over 20 tax cut bills. Unfortunately, the vast majority of these bills preferentially benefit the wealthy, exacerbating income inequality in this state. Legislators have chosen to prioritize those who already have more than they need over those struggling to get by. Thankfully, Montana saw $100 million in tax cuts this session rather than $900 million. Going forward, MBPC will continue to educate legislators and the public about the effects of tax cuts already passed and any yet to be proposed.

MBPC’s Comment on the Proposed End to Pandemic Unemployment Insurance (UI)

On June 8, 2021, the Montana Budget & Policy Center submitted formal comment to the Montana Department of Labor & Industry, raising concerns with the proposed end to pandemic unemployment insurance (UI) benefits later this month. The Pandemic Emergency Unemployment Compensation, providing an additional $300 in benefits, and the Pandemic Unemployment Assistance program, for self-employed, underemployed, and independent contractors, have been critical programs as many families continue to face barriers to employment. According to the National Employment Law Project, approximately 25,000 Montanans could face the loss of benefits used to support their families. For more information, see our blog Ending Pandemic Unemployment Early Won’t Fix Barriers to Finding Work.

To read our submitted comments, download the PDF here.

Montana’s Recovery Depends on Child Care. Relief Funding Can Make it Affordable and Accessible.

Today, Montana KIDS COUNT released a report detailing data on child care availability, quality, and affordability, “Child Care is Critical to a Modern Economy. Montana Has the Opportunity to Make It Affordable and Accessible.” This report finds that Montana families across the state struggle to find and pay for child care. At the same time, child care businesses operate on narrow margins and often must sacrifice worker pay.

“We know that most parents need child care to keep working, but availability is difficult to find. For every three kids under 6, there is only one licensed slot available,” said Xanna Burg, KIDS COUNT Coordinator with the Montana Budget & Policy Center. “Part of the low supply is because child care businesses struggle to stay open and offer good wages to workers. Providers do not have many options though, as parents already cannot afford child care costs.”

Highlights from the report findings for Montana include:

  • The current licensed child care supply provides one slot for every three children under age 6.
  • Six counties do not have even one licensed child care business.
  • Child care often costs more than in-state tuition at UM or MSU.
  • Child care workers earn $22,900 per year if working full time, barely hovering above the minimum wage.

“Child care is essential as Montana reopens because businesses need workers that have a safe and reliable place for their children during the day. Investing in child care is a win for children, families, and businesses,” said Stephanie Morton, Program Manager with Healthy Mothers, Healthy Babies. “When child care works, our state can get back to work.”

Montana received more than $200 million in federal relief money to support child care. Montana KIDS COUNT provides ten recommendations for utilizing these funds to build a better child care system for children, parents, and businesses that can help now and in the future. The portion of federal money set aside for child care businesses should focus on areas with significant shortage including rural areas, care for infants and toddlers, and providers with non-traditional hours. Capacity grants to encourage new child care businesses can help bolster supply while additional support for Head Start is a ready-built solution to reach more children in Montana.

Montana KIDS COUNT also created an interactive visualization to explore available data on child care in our state. County-level data on access, quality, and affordability can be found at montanakidscount.org/child-care-in-montana

About Montana KIDS COUNT

Montana KIDS COUNT is a leading resource for data on child and family well-being in the state and is dedicated to providing current, relevant, and reliable data to shape the issues affecting Montana children and families. More information can be found at montanakidscount.org/. Montana KIDS COUNT is a project of the Montana Budget & Policy Center, a nonprofit, nonpartisan organization providing in-depth research and analysis on budget, tax, and economic issues. More information can be found at www.montanabudget.org.

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