Bill to launch Oregon child tax credit gains steam in Salem

Oregon is poised to join a handful of other states that guarantee a direct cash payment to its poorest families, mimicking a federal program that briefly fueled a dramatic decrease in child poverty levels coast to coast before it was dismantled in 2022.

The Legislature’s Joint Committee on Tax Expenditures unanimously passed a bill Tuesday that would establish a $1,000-a-year Oregon Kids Credit at a cost of $37.5 million a year. The proposal now moves to the House for consideration.

As originally envisioned by its backers, the Oregon version of the child tax credit would have been the nation’s most generous, allowing families that make up to $50,000 a year to benefit at some level until their children turned 18, with payments topping out at $1,200 a year. That would have cost four times as much as the current, more scaled-back version.

Instead, Oregon will grant single parents or families who make up to $25,000 a year a $1,000 annual credit for every child under the age of six in their household with smaller credits available for families with incomes up to $30,000.

“I am a single mom, and although I’ve filed for child support, I’ve yet to receive any money from my son’s father,” Felicia Gee of Springfield, the parent of a 4-year-old, wrote in support of the bill. “I work full time and feel like no matter how hard I try, I just can’t get ahead and this would help so much.”

The money is intended to defray the costs of food, childcare, and similar expenses, said Daniel Hauser, deputy director of the Oregon Center for Public Policy, a left-leaning think-tank. Families could begin getting payments when they file their 2023 taxes next year.

The state-level programs enacted so far are much more modest than the federal government’s pandemic-era effort, which topped out at $300 per child per month.

The nation’s most expansive state version of the child tax credit in Minnesota, covers families who make up to $35,000 a year and provides payments of up to $1,750 a year for every child under 17.

The design of Oregon’s program does have one key difference: By 2026 — or even 2025, if everything breaks the state’s way – payments to families could be quarterly, instead of in a lump sum after the tax year ends, because, Hauser said, “people’s expenses aren’t annual.”

The catch, he said, is that making payments on a quarterly basis will require a waiver from the federal government so that the money won’t be counted against a household’s income, making them ineligible for other federal benefits, like food stamps.

Hauser said his organization estimates that 50,000 Oregon children will benefit from the tax credits, many of them from families of color or who live in the state’s rural reaches, where wages tend to be lower.

His group’s goal, he said, is to scale up the program in future years, by broadening the income eligibility. “Economic precarity is not a narrow and rare experience for families of young children,” Hauser said.

Besides Minnesota, other states that have passed child tax credits include New York, Colorado, California, Virginia, Massachusetts, Vermont, New Mexico and New Jersey.

Those are all Democratic-leaning states. But the concept has attracted some bipartisan support, in Oregon and elsewhere, even as some lawmakers in states, including Montana and Nebraska, have shot down similar proposals because the money isn’t tied to work requirements or because they’d prefer to see it spent on vetted childcare programs.

Scott Bruun, the director of tax, fiscal and manufacturing policy for Oregon Business & Industry, a Republican-friendly group, testified in support of the proposal, calling it “a band aid to help cover Oregon’s policy problems,” but also “critical support for young working families.”

— Julia Silverman, @jrlsilverman, [email protected]

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