Albuquerque Journal: American Rescue Plan lifts NM families out of poverty
By U.S. Senator Ben Ray Luján (D-N.M.)
March 7, 2021
This weekend, the Senate voted on critical COVID-19 relief legislation to support struggling families and small businesses and to get vaccine shots into the arms of New Mexicans. This help couldn’t have come soon enough.
Forty-six percent of New Mexico households have lost employment income since March 2020. For households with children, that share jumps to more than half.
But the truth is that many families were struggling long before the coronavirus. In 2019, the Federal Reserve reported that nearly half of Americans could not cover a $400 emergency expense, like a car repair or medical bill. Before the pandemic, nearly half of New Mexicans were unable to cover a three-month loss of income.
The American Rescue Plan passed by the Senate includes a simple solution to put cash back in the pockets of working New Mexicans: Tax relief.
The new COVID relief package expands the popular Earned Income Tax Credit (EITC), Child Tax Credit (CTC), and Child and Dependent Care Tax Credit (CDCTC), a commonsense move that has garnered bipartisan support in the past.
While childless workers have historically been locked out of the poverty reduction benefits of the EITC, this plan nearly triples the maximum credit for taxpayers without qualifying children from $543 to $1501. The package changes the age limits to ensure that 135,000 New Mexicans get to keep more of their hard-earned paychecks.
Families with children will see the greatest benefits. The improved CTC provides a $3,600 credit for children under the age of 6, and increases the credit for children between 6 and 16 from $2,000 to $3,000. It makes sure that individuals making under $75,000, and families making under $150,000, receive the full benefit. Because families with children need real assistance now, it also ensures the tax credit is provided monthly to each household, not once a year at tax season. That’s an extra $300 each month for all families with children under age 17, and $250 a month for families with children under age 6.
According to the Center on Budget and Policy Priorities, expanding the CTC would lift an estimated 32,000 New Mexico children out of poverty, and cut child poverty by half in the state, from 13.1% to 6.5%. Expanding the CTC in the American Rescue Plan also has the potential to reduce Hispanic child poverty by 45.4% and Native American childhood poverty by 61.5% nationwide.
Finally, the package expands the CDCTC to cover half of child-care costs up to $4,000 for one child and $8,000 for two or more children, making child-care costs more affordable and allowing parents to return to work.
The COVID-19 pandemic has highlighted the dire reality that too many New Mexicans are one emergency away from financial catastrophe. While the American Rescue Plan isn’t the magic bullet for eliminating all of New Mexicans’ financial hardships, it will help lift tens of thousands of New Mexicans, especially children, out of poverty and give them a fair shot to get ahead during one of the toughest eras in our history.
I’m proud to see these progressive provisions included in the American Rescue Plan, and I want to share the good news with New Mexico’s families.