Oregon Could Make COVID-Era Child Tax Credit Permanent

Joan McGuire

The Oregon Kids’ Credit would write the expired federal child tax credit into Oregon law – on a more narrow scale targeting at-risk Oregonians.

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A bill before the Oregon Legislature this session would localize and make permanent the COVID-era federal child tax credit.

Oregon’s House Bill 3235, which had its first committee hearing on Tuesday, would create the Oregon Kids’ Credit, a tax rebate of up to $1,200 per child for Oregon families earning less than $50,000 when filing jointly, or $30,000 when filing individually.

The bill was introduced with bipartisan support in the House. Eastern Oregon Republican Greg Smith joined East Portland representativeAndrea Valderrama and three other Democrats as the bill’s chief sponsors.

“We’re going to spend the money,” Smith said, testifying in support of the bill during a Tuesday hearing. “Are we going to take care of our kids and help them be healthy and successful and ready to become adults?”

RELATED: A Novel Development

The federal expanded child tax credit expired in December of 2021, but is credited with a 30% decline in child poverty, prompting recommendations from economic experts — including Treasury Secretary Janet Yellen— to make the tax rebate permanent.

Oregon’s bill was drafted with help from the Oregon Center for Public Policy, which endorsed the legislation as “an effective and efficient way to deliver resources to the families in greatest need.”

OCPP’s evaluation of the policy says the tax credit would bring nearly 20,000 children in the state above the povertyline, and “lift up” 200,000 more families by providing them with funds for essential living expenses. The center also says the rebate would disproportionately benefit Black, Indigenous, and Latino children, as well as children in rural areas, reducing racial, ethnic and geographic disparities.

Tyler Mac Innis, policy analyst at the OCPP, tells Oregon Business that despite being based on the expanded child tax credit, the state’s budget priorities meant the Oregon Kids’ Credit needed to be tailored to help families most in need of assistance.

“The reality is at the state level, we have to balance our budgets. We can’t just print money like the federal government can, so we wanted to make this more targeted,” says Mac Innis. “We want to get the most bang for our buck, so to speak, so we want to target every dollar.”

Another key distinction from the expanded child tax credit is that the Oregon Kids’ Credit is refundable, meaning a parent would receive the full tax refund, even if it exceeded their taxes paid that year.

“In the federal version you had to earn a little bit of money before you get that full amount,” says Mac Innis. “If you’re a single parent about to drop out of the workforce in order to take care of your kids, you would qualify for the Oregon Kids’ Credit even if you don’t have a significant amount of income on your state tax return, which is a key difference from the federal version.”

RELATED: A Crisis of Care

The federal tax credit was implemented when much of the population was not working. Oregonians have now returned to the workforce, and the average cost of child care, over $10,000 a year, in some estimates, well above what this tax provision provides.

Chief sponsor Andrea Valderrama tells Oregon Business over email that even though even though people have returned to work, many parents, especially Oregonians of color and rural Oregonians, needed this support long before the expanded child tax credit kicked in.

“Even before the pandemic struck, more than two in every five Oregon households lacked the resources needed to make ends meet. While many Oregonians have returned to work, they have also faced rising costs, unaffordable housing, and many other economic challenges,” writes Valderrama.

Valderrama added the tax credit is an investment which could produce long-term benefits, citing research which showed children receiving the expanded federal credit would be more likely to attend and complete school.

The measure does not yet have a floor session or a committee hearing scheduled.

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