The federal government provided enormous financial aid to the people of the United States. This includes payments paid directly to their bank accounts through direct deposit. Because of the continued financial impact of COVID-19, legislators in Washington, D.C. approved stimulus aid for the economy.
According to a report released in February 2022 by the Department of Health and Human Services, these payments will have a negative impact on the number of households living in poverty in the United States. The statistics revealed that the relief payments kept millions of households out of poverty, with the majority of them being families with children.
Only two stimulus programs were necessary to lift 10.8 million people out of poverty, and these two initiatives would be simple to recreate for legislators who desire to alleviate the economic hardships that many people are now experiencing.
These Two Sorts of Stimulus Alleviation Were Responsible for Keeping an Astonishing Number of Individuals Out of Poverty
Approximately 7.9 million people were able to avoid poverty as a consequence of economic impact payments provided under the American Rescue Plan Act, according to a study released in February by the Department of Health and Human Services. An additional 2.9 million people were kept out of poverty as a result of the advanced Child Tax Credit. There were 2.9 million persons in total, with 1.8 million of them being children.
This does not take into account the benefits of other stimulus measures, such as increased unemployment compensation, which also contributed to the increase in earnings of millions of people. There were just two things that were accomplished by the economic impact payments and the advance Child Tax Credits:
- A total of 1,400 stimulus cheques were distributed to eligible individuals and dependents under the EIP program.
- The advance Child Tax Credit raised the amount of the previous Child Tax Credit to $3,600 for children under the age of six and $3,000 for older children as a result of the tax reform legislation. Previously, the maximum amount was only $2,000, which was the prior limit under the old laws. In addition, because of the enlarged credit, the full sum is now recoverable, when previously just $1,400 was refundable. Rather than just decreasing a tax bill to zero, a refundable credit might reward taxpayers with more money back than they have already paid in taxes. Child Tax Credits were also handed out in advance from July to December, but at a rate of $300 per month or $250 per month, whereas the previous Child Tax Credit was only accessible when submitting tax returns.
Giving them this money throughout the year was sufficient in and of itself to make a significant difference in the lives of millions of taxpayers. And there’s a compelling case to be made that comparable help is still necessary for 2022 — particularly given the fact that inflation is increasing as a result of ongoing supply chain challenges caused by the pandemic’s lasting impacts.
Despite repeated attempts, lawmakers have not been successful in extending the enhanced Child Tax Credit. Although there has not yet been any discussion of a second stimulus check, with the price of gas and other products expected to continue to rise, it is possible that lawmakers will decide in the future that additional relief is required — particularly given the fact that HHS data shows the payments made last year had such a positive impact on lowering the poverty rate (see chart).
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