The Child Tax Credit in Puerto Rico After Hurricane Maria

A new study from the Youth Development Institute of Puerto Rico reports that 30% of parents of young children in Puerto Rico lost their jobs or had their working hours reduced after Hurricane Maria struck the Island last year. More than half of those children were already living in poverty before the hurricane. “These children and families were living on the edge,” says Amanda Rivera Flores in a new article at The Hill, “and Maria pushed them off a financial cliff.”

Rivera Flores is the director of the Youth Development Institute, and she has a suggestion to help these families: extend the Child Tax Credit fully in Puerto Rico.

For many years, the Child Tax Credit has given taxpayers $1,000 for each child in the family who is 17 or younger at the end of the tax year. Federal tax reform in 2017 expanded the child tax credit by as much as $2,000 per child. Up to $1,400 of that total is refundable, meaning that even if the person filing the tax return has no tax liability, he or she can still receive a check back from the IRS for as much as $1,400.

Failure to fully extend the child tax credit to Puerto Rico is frequently justified by the fact that individuals do not pay taxes on income earned in Puerto Rico; the refundable nature of the Child Tax Credit means that taxpayers in the fifty states can receive funds even if they owe no taxes.

The 2017 tax law  expanded eligibility for the CTC among families living in states based on income.  Families earning as little as $2,500 or as much as $400,000 may now qualify.  The CTC is not a policy only for the working poor.

Families in Puerto Rico, where the average annual income is just about $20,000 a year, could be greatly helped by the CTC according to the recent study. The Youth Development Institute’s research shows that many families in Puerto Rico have trouble paying for basic food, shelter, and clothing.

CTC in Puerto Rico

Taxpayers in Puerto Rico are eligible for the CTC, but only starting with their third child. Puerto Rico, which has the lowest birth rate in the United States, has few families with three or more children. Even though there is greater need in Puerto Rico than in any of the 50 states in terms of child poverty, far fewer families receive the Child Tax Credit.

Rivera Flores points out that growing up in poverty has consequences. Children who grow up without adequate food and shelter are less likely to grow up to be self-sufficient adults. The population in Puerto Rico continues to dwindle, and the children who are a key resource for future economic stability must be supported if Puerto Rico is to recover.

The bipartisan Congressional Task Force on Economic Growth for Puerto Rico recommended making the CTC available for all children in Puerto Rico, not just some of those in large families. Rivera Flores asks Congress to make this change, one which would have almost immediate beneficial effects for families in Puerto Rico.