By Betsy Ohrn, Director of Research

As tax season ends, we highlight the important work that is being done to build equity in the tax code. One critical piece of legislation is Child Tax Credit-- a benefit that would provide significant critical resources to Black and brown families.

We are extremely excited to see this policy included in Governor’s Walz’s budget proposal. This is a unique opportunity to invest in families and promote racial equity across Minnesota.

In 2021, as part of the American Rescue Plan Act (ARPA), Congress established its first near-universal child benefit in the form of an expanded, monthly CTC. This CTC contributed to a decline in child poverty rates by over 40%. While there was hope the CTC would be made permanent, federal inaction has left it up to the states to continue this critical effort.

The Governor's proposal follows a similar structure by providing a fully refundable tax credit for children younger than 18 years old and older kids with qualifying special needs. This proposal is estimated to benefit more than 360,000 families and would provide significant ongoing resources directly to families to help cover critical expenses and get their kids off to a strong start. The policy also boosts family income flexibility so families can spend the money where they most need it.

Analyses find that a tax credit like this could impact 463,000 children, almost 38% of children in the state. It would cut child poverty in Minnesota by 25 percent and lift 22,500 children out of poverty.

Furthermore, we know that a higher proportion of Minnesotan children are Black, Hispanic, Indigenous or Latino, about 33 percent, compared to 22 percent of all residents. For this reason, investing in Minnesota children, especially those with fewer economic means, is an investment in a racially equitable and inclusive economy.

In 2019, 11 percent of kids in Minnesota were living at or below the poverty line, but studies looked at that number by race and cultural community. The poverty rate for Somali children in Minnesota sits at around 57 percent, 58 percent for Burmese children, 31 percent for Mexican, 29 percent for Hmong, and at 32 percent for African American children. A CTC would make a significant impact on these communities.

We are excited to learn more about the governor’s proposal and see the details discussed in the legislature. We encourage policymakers to follow the key design principles laid out by ITEP including making the credit fully inclusive, working to offer the credit as a monthly payment, and phasing it out by income.

Help make this historic investment a reality!

Find and call your legislator and/or sign your organization on this letter to state policymakers coordinated by: Children’s Defense Fund-Minnesota, Legal Services Advocacy Project, Minnesota Budget Project, & Minnesota Catholic Conference, urging them to step up for our families and children by creating a state Child Tax Credit - modeled on the federal expanded CTC’s success – in 2023.

The letter below will be shared with Governor Tim Walz and members of the Minnesota Legislature at key moments in the policy debate.

Let them know you support this meaningful step in enhancing the economic inclusion and well-being of children in Minnesota!

Want to know more about "The Whiteness of Wealth?" Check out this important and powerful discussion with Dr. Dorothy A. Brown we held last January in partnership with the Minnesota Department of Revenue: "Unleashing the power of the tax code for equity."