Dear Chairperson McDuffie, members of the Committee, and staff,

Thank you for the opportunity to submit written testimony on behalf of Bread for the City in support of restoring and expanding the District Child Tax Credit (DC CTC) in the FY26 budget.

As an organization that envisions Washington, DC, as a nurturing community where all residents have access to the basic material resources they need for survival and growth and the prosperity of their social, emotional, and spiritual lives, BFC advocates for an equitable and just DC tax system and urges the raising of adequate revenue to support much needed economic security investments. 

BFC is one of the many organizations that works on economic and tax justice within the Fair Budget Coalition (FBC), advocating for investments in family economic security and mobility support and overall community wellbeing. As a proud member of the FBC, we stand with the Coalition in advocating for a just and inclusive DC—a place that supports strong and stable communities, that allows low-income Black and non-Black communities of color to live in dignity, and that makes it possible for all residents to achieve economic security.

In alignment with our efforts to secure a permanent guaranteed income program in DC, it was inspiring to see the introduction and passing of the District Child Tax Credit Amendment Act of 2023, and we were disheartened to see it repealed in the mayor’s FY26 budget proposal.

Nearly two-thirds of all households in the District and 97 percent of those with incomes below $35,000 receiving federal child tax credit payments reported using those dollars to pay for basic needs like food, clothing, rent, and utilities. A robust DC CTC would mirror these positive impacts, setting the stage for the economic security and mobility of DC families living with the lowest incomes. 

The shifting political landscape the country and the District are facing highlight yet another need for DC Council to protect our most vulnerable neighbors and fortify local programs that provide economic security. Numerous threats to the economic security of DC residents have emerged this year: 

• The introduction of congressional anti-DC home rule legislation undermining the principles of self-governance and local control; No other jurisdiction in the country faces such an assault on its right to self-govern, 
• Federal layoffs that will drive DC’s revenue decline, and are likely to disproportionately harm black workers, 
• The mild recession the city is expecting; local revenues are expected to decline by more than $1 billion over the next three years, 
• The 2025 Budget Reconciliation Bill which endangers the Medicaid coverage and SNAP food assistance of thousands of Washingtonians. 

DC lawmakers must commit to equitably raising revenue in order to mitigate harm to its community members.

Recommendations

At Bread for the City we have seen firsthand the impact that direct cash transfers can have. Since the pandemic, individually and through partnerships, Bread for the City has distributed over $56 million in direct cash transfers to members of our community, and the results are always the same: families use the cash transfers to pay for basic needs, namely housing and food costs, decreasing rates of housing and food insecurity, and improved mental well-being.  Other major uses of funds included transportation, debt reduction, spending more time with family, and professional goals like investing in small businesses. 

One mother from our guaranteed income pilot, CashRx, shared with us how she was able to purchase the prescription glasses frames that her middle school aged child wanted rather than the ones covered by insurance. She expressed that this was only possible because of the pilot and that she was thankful to know that her child would feel happy and confident at school wearing their new glasses. 

Direct cash programs have played a significant role in increasing economic security and mobility in DC families. We trust that our clients are the experts of their own lives and use cash transfers effectively according to their situations. Similarly, an expanded DC CTC that increases the tax credit to up to $1,500 per child under 18, regardless of the parent’s immigration status, will communicate to parents in the city that their government trusts them. We also recommend removing the cap on the number of children per family who can receive the credit. 

For FY26, we recommend that this CTC be funded with at least $80 million that will go directly to District families. Prior DC Fiscal Policy Institute analysis showed that a $1,500 per child credit for those with the lowest incomes would reduce child poverty by 18%. This would be especially impactful for Black children, who are the vast majority of children (77%) living in poverty in DC, making it just as much about economic justice as it would be about racial equity. 

Further, expanding the age of eligibility to all children under 18 would broadly target DC child poverty, especially in older children. According to DC Fiscal Policy Institute, on average between 2019 and 2023, children aged 6 to 17 in the District experienced poverty at a rate of 22 percent, which is higher than the 17 percent rate for children under the age of 6. It is also important for the District to continue to support the children of undocumented parents, especially as they face growing attacks by the federal government. 

Finally, we also recommend that the District budgets $5 million to pilot and assess an evidenced-based, family-driven, opt-in economic mobility coaching initiative to support low-income family’s long-term economic mobility path towards the middle class. This pilot would complement the immediate relief and financial breathing room for families in poverty the CTC provides, while also supporting long term economic mobility. 

Our partners at LIFT, a nonprofit dedicated to advancing two-generation economic mobility, have seen extraordinary results in their financial coaching programs; 96% of their clients improved their overall financial health and 95% boosted their income or furthered their education, with an average income increase of over  $20,000 annually. 

Transformative policies like an expanded DC CTC and relationship-based financial coaching programs can be funded through just and racially equitable taxes on DC’s superfluous wealth. The following are some of Just Recovery DC’s recommendations to equitably increase the City’s revenue: 

• An increased tax rate on capital gains, which overwhelmingly flow to the top 1 percent; 
• An increased tax rate on income above $500,000;
• An increased tax rate on income above $1 million; 
• Increased taxes on homes valued at over $1.5 million
• A Business Activity Tax on for-profit organizations 

Investing in our children is economic and racial justice, and supports overall community wellbeing.

Expanding the DC CTC aligns with one of the District’s core values, “to give all children, in every ward, the opportunity to thrive.” Addressing the District’s racial wealth gap and federal threats the District is currently facing through a just and equitable tax code is of utmost importance for DC children, their families, and the District at-large. In order to “Grow DC” we must “Choose DC” and the wellbeing of all of its community members. 

Thank you for your time and consideration of these matters,

The Economic Security Team at Bread for the City

Brittany Pope, LISW
Economic Security Supervisor

Daisy Gomez Palacios, MPP
Economic Security Fellow

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