Biden’s child tax credit will spread wealth. But 13K Philly kids stand to miss out

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Greenfield Elementary School Playground. (Emma Lee/WHYY)

Greenfield Elementary School Playground. (Emma Lee/WHYY)

For Antonia Gunter, 33, of Frankford, it’s a chance to start her own business and take her kids to the beach. For Carolyn Hill, 64, of Franklinville, it’s money for bills and to go out to eat. For Lavern Riddick, 35, of Southwest Philadelphia, it’s a head start on next month’s rent.

The Advanced Child Tax Credit, along with other expanded tax benefits in the American Rescue Plan Act, could reduce child poverty by one-third in Philadelphia, and deep child poverty by one-half, according to City estimates. In total, 75,000 people could rise out of poverty due to the tax credits, which function more like a direct stimulus payment.

“It’s a game-changer for Philadelphia,” said Beth McConnell, director of policy for the Philadelphia’s Office of Community Empowerment and Opportunity, which is charged with doing outreach for the program, along with the Mayor’s Policy Office.

Carolyn Hill, 63, speaks about her experience with the child welfare system during an event at Maplewood Mall in support of continuing the Child Tax Credit. (Laura Benshoff)

For years, Philadelphia has stood out for its deep poverty rate, determined by the number of people living on less than half of the federal poverty line. For a family of four, that means earning around $13,100 or less a year, according to the U.S Census Bureau. More than one in 10 residents live in deep poverty, according to 2019 numbers from the Pew’s Philadelphia Research and Policy Initiative. The city’s overall poverty rate hovers around 23%, third highest in the country behind the smaller cities of Cleveland and Detroit.

But the impact will be uneven in a city where thousands of the lowest-income families are not required to file taxes. While around 300,000 Philadelphia households citywide qualify for the credits, IRS estimates show that 13,907 children in the city are at risk of not benefiting from them because their caregivers are not required to file taxes, and therefore are not automatically enrolled.

North Philadelphia would disproportionately bear the impact of missing this benefit. The ZIP codes that encompass Port Richmond, Kensington, Juniata, and Hunting Park have the highest number of kids whose parents are not required to file taxes, according to IRS data. The federal agency has not yet reported to the city how many of these families may have filed through a special website, the non-filer portal, designed to make it easier for this group to access the credit.

IRS data on children living in households that are not required to file taxes, and Census data on children living in deep poverty, by ZIP code. (Courtesy of the City of Philadelphia Office of Community Empowerment and Opportunity)

At a recent event held by State Senator Art Haywood’s office, local elected officials and community organizations tried to raise awareness for the credit with a food-and-clothing giveaway in Germantown, where 438 kids live with caregivers who don’t file taxes.

“It doesn’t matter if the resources exist, if people don’t take advantage of it,” State Representative Chris Rabb told the small crowd, as people huddled in pockets of shade.

Another community, citizen children of undocumented parents, also qualify for the credit, but their families must deal with additional hurdles to sign up.

Immigrants without work authorization in the U.S. still pay billions in federal — as well as state and local — taxes each year, often through payroll taxes. In many cases, they do not file tax returns because they are working under an assumed social security number or get paid in cash, said Will González, executive director of CEIBA, an organization which provides free tax preparation services in Kensington.

Not many organizations in Philadelphia are set up to provide help undocumented immigrants navigate the extra steps involved for them to enroll in CTC.

“We are working with Congreso, HACE, and Esperanza to increase the network of organizations in the Latino community that can provide this type of assistance,” said González.

Undocumented parents who do not already file their taxes must first register for an Individual Taxpayer Identification Number, or ITIN, a process that can take two to three months. After that number is issued, recipients must use it to file a tax return, which takes several more weeks. The timeline means it’s unlikely families enrolling this summer will see child tax credit dollars before the fall, said González.

That wait is “kind of sad,” he said, but “we’re going to try to get as many folks this help as possible.” So far, that’s been about 150 households, said González.

Philadelphia officials are aware of the knowledge gap. The city will soon pump more money into awareness, having budgeted $1.464 million to take out ads and support community outreach in the most recent municipal budget. If the tax credits are made permanent, they said that structure will be in place for future years.

“People know what they need the most”

The coronavirus pandemic provided a laboratory to track what happens when the government gives people cash.

“The argument for cash is really a libertarian one, which is to say, people know what they need the most,” said Luke Shaefer, professor and director of Poverty Solutions at the University of Michigan. “When we provide things with strings attached … it’s kind of like the government saying, ‘I know what’s best for you.’”

As pandemic stimulus payments flowed into U.S. bank accounts, Shaefer and others watched how people spent them. “A lot of us were worried about a wave of evictions, and that really never happened,” he said. In many cases, eviction moratoriums helped keep people housed, but stimulus money also went to basic expenses, such as rent and bills.

The Federal Reserve also tracked loan defaults, or people not keeping up with payments on things like cars and houses, which often closely follow an economic downturn. That did not happen during the coronavirus recession, which researchers attributed to both the availability of loan forbearance, and federal government support in the form of boosted unemployment and stimulus checks.

In other countries with child allowances, such as Canada, the child poverty rates declined after their introduction.

On the ground in Philadelphia, that track record leads to excitement that the credits could reshape institutions long-plagued by poverty, from the public education system to child welfare. Research from the National Bureau of Economic Research shows that increasing tax credits can boost test scores.

As child tax credit money started rolling into local bank accounts in July, the effect was immediate in Philadelphia.

After a year of no birthday parties or extra expenses, Gunter took her three kids to Atlantic City after receiving the first advance tax credit payment, hitting the beach and then the boardwalk for funnel cakes and temporary tattoos. She also caught up on her electricity bill, which she had received a shut-off notice for in June.

Antonia Gunter, a child tax credit recipient, with her twin daughters Gabriella and Isabella, 6, outside their home in Philadelphia. (Kimberly Paynter/WHYY)

“It was nice to finally get back to some type of normal for [the kids], because financially this past year was horrible,” said Gunter, a former hospice aide who had to stop working to take care of her eldest child, Brian, 9, who has autism spectrum disorder.

The credit is providing temporary relief from financial stress, but it could also change Gunter’s long-term plans. For as long as it lasts, she said, “I can relax and just focus on taking care of my son,” who had to be checked into a residential treatment facility in Hatboro. Gunter visits him nearly every day, working towards bringing him back home to live with her. She hopes the extra money can also help her work towards another goal: going into business for herself doing hair and making wigs. Starting her own business, she said, would allow her the flexibility to take care of her family.

Antonia Gunter, a child tax credit recipient, with her twin daughters Gabriella and Isabella, 6, outside their home in Philadelphia. (Kimberly Paynter/WHYY)

Philadelphia also has the highest rate of family separation by child protective services of any major U.S. city, according to 2019 City Council testimony by Penn Law Professor Kara Finck. Advocates for families have argued that many of the things that put a child on the path to foster care, such as missing school or bad housing conditions, are a direct reflection of the city’s poverty rate.

“We know that the vast majority of families involved in child welfare are accused of neglect, not abuse, and poverty is the common denominator in almost all child welfare cases,” said Kathleen Creamer, managing attorney of the family advocacy unit of Community Legal Services of Philadelphia

That’s a reality Carolyn Hill knows firsthand. A grandmother of 15 living near Franklinville, she currently has custody of three grandchildren. Two years ago, she said her landlord informed her that she needed to start paying the water bill. She blamed that incident for losing custody of her nieces, who were placed with a family member with more money.

“I didn’t have enough money, so they took them from me,” she said. “If I had been getting that tax credit. I probably would have been able to pay that water bill.”

Broke in PhillyWHYY is one of over 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push towards economic justice. Follow us at @BrokeInPhilly.

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