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Progress in Five Minutes: Slashing Child Poverty in Half
Though not as flashy as the $1,400 cash payment, the expansion of the Child Tax Credit could be a real game changer that significantly reduces child poverty in America.
Wendy Biddlecombe Agsar
Though not the main focus of the $1.9 trillion American Rescue Plan, the expansion of the Child Tax Credit could be a real game changer. The expanded tax credit is expected to reduce child poverty by nearly half, putting the woefully-behind US in the company of wealthy countries that offer parents assistance with the costs of raising children.
How It Works
Americans with children already receive a tax credit of $2,000 per child once a year when filing taxes; the American Rescue Plan increases the amount to $3,000, with an additional $600 annually for children under six. Seventeen-year-olds, previously not counted as children, are now also included. (The enhanced tax credit doesn’t apply to families with adjusted gross income above $150,000.)
The boosted child tax credit will last for a year, with monthly payments starting in July. In The New York Times, reporter Jason DeParle wrote that despite its technocratic framing as an expansion of an existing tax credit, the payment is “essentially a guaranteed income for families with children, akin to children’s allowances that are common in other rich countries.” More families will now meet the eligibility criteria as well, which will reach an estimated 27 million more children, according to the Center on Budget and Policy.
Alissa Quart, the executive director of Economic Hardship Reporting Project, author of Squeezed: Why Our Families Can’t Afford America, and a TPN member, welcomed the news as “basically parental UBI [universal basic income].”
An increased child tax credit was part of the policy recommendations included in the 2019 report by the National Academy of Sciences, A Roadmap to Reducing Child Poverty. (It’s also worth noting that a higher minimum wage was, too.) That report found that child poverty can cost the US between $800 billion and $1 trillion a year in crime, poor health outcomes, lower wages, and other factors.
Who Wanted It and Who Didn’t
The Senate voted on the American Rescue Plan as a whole, not just for the child tax credit, with all Republicans voting no, along with two Democrats.
Big props to Rep. Rosa DeLauro (D-Connecticut), who has introduced a child benefits bill during the last ten sessions of Congress, and Sen. Patty Murray (D-Washington), who also has been working on child poverty for decades.
During stimulus negotiations, a Republican plan dropped the expanded child tax credit. There is some general support for the idea, however: Sen. Mitt Romney (R-Utah) recently introduced The Family Security Act, which includes monthly payments for families. Other Republicans, notably Sens. Marco Rubio (R-Florida) and Mike Lee (R-Utah), support a higher child tax credit, but not a “child allowance, paid out as a universal basic income to all parents,” which they believe is “not tax relief” but “welfare assistance.” Both senators pushed to increase the last child tax credit increase in 2017.
It’s perhaps more important to note the popularity of the plan with the American people. Speaking recently on The Ezra Klein show, Sen. Bernie Sanders called the American Rescue Plan as a whole the “most significant piece of legislation passed since the 1960s” for working people, noting that 75 percent of Americans support the stimulus.
What’s Next
Proponents, including Senate Majority Leader Chuck Schumer, hope to make the child tax credit permanent. For a good example of what could be, the US can look to their friendly neighbor to the north. Canada’s Child Benefit, currently at USD $5,420 per year, was introduced in 2016. As David Byrne wrote in his publication, Reasons to be Cheerful, child poverty decreased by 18 percent in its first year, and 33 percent after two years. Byrne notes that Alberta, the province with both the highest median wages and wealth inequality, cut child poverty in half. With the price tag for poverty in Canada between 5 and 7.5 billion a year, “The positive impact of this program will be felt by everyone,” he wrote.
In addition to the growing support for child allowances, there’s also growing momentum for national paid family leave in the US, with more than 190 companies calling on Congress to pass legislation guaranteeing Americans time off to care for their families. Rep. DeLauro and Senator Kirsten Gillibrand (D-NY) have recently reintroduced the Family and Medical Insurance Leave (FAMILY) Act, which would allow Americans partial pay for 12 weeks when they take time off from work to have a baby, care for a sick family member, or address their own health issues. Though this last year has been extremely difficult, especially for families, we see this moment as a real opportunity to address these gaps in social benefits for families.
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