With Republicans busily teeing up a plan to reduce taxes on corporations and wealthy business owners, two Senate Democrats decided on Thursday to do something different by unveiling a tax bill that would cut the country’s unconscionably high child poverty rate by almost half.
The legislation, from Colorado’s Michael Bennet and Ohio’s Sherrod Brown, would drastically expand the Child Tax Credit—transforming it into the sort of far-reaching cash benefit for parents common in Europe and other developed countries. While the proposal clearly won’t have legs so long as Republicans remain in control of Congress, it’s yet another example of mainstream Democrats embracing a policy idea that, not long ago, was barely talked about outside of left-wing academic and activist circles.
Today, the Child Tax Credit is geared toward helping working, middle-class parents—less so the poor. It allows taxpayers to deduct up to $1,000 from their IRS bill per eligible child, and starts phasing out for married couples who make more than $110,000 a year. The problem, at least for people interested in alleviating poverty, is that the benefit is just partially refundable—meaning that families who don’t owe taxes for the year can only get a fraction of the credit back as cash. As a result, it provides less assistance to needy households, who generally don’t owe the government much come tax time. The absolute poorest parents—those with incomes below $3,000—can’t claim any of the credit at all.
Bennet and Brown would revamp the Child Tax Credit to make it larger and more universal. They would start by more than tripling its value to $3,600 a year for each child up to 5 years old, while bumping it to $3,000 for kids ages 6 to 18. They would also make it fully refundable, meaning that for the first time, low-income parents could claim the whole benefit. Finally, instead of making parents wait until they file their tax returns to get the credit, they’d receive it in advance as a monthly payment. In the end, families would get $300 a month for each young child, while those with older kids would receive $250. The credit would still wind down for upper income parents, as it does today.
Of course, at that point the Child Tax Credit would no longer look much like a tax credit. Instead, it would resemble the sorts of no-strings-attached cash payments other advanced, wealthy countries already make to parents, which are often referred to as child allowances. The fact that the United States doesn’t provide that kind of support to families is one of the most important reasons why our child poverty rate is so much higher than that of our international peers.
Bennet and Brown’s proposal would go a long way toward rectifying that shameful failing of our welfare state. Today, 15.2 percent of Americans under 18 live in poverty, gauged by the Census Bureau’s most accurate measure. An analysis by researchers from Columbia University finds that the senators’ proposal would bring that figure down to 8.9 percent. It would also half the percentage of children in deep poverty and nearly eliminate the fraction of families living on less than $2 a day, a group whose numbers swelled in the wake of Bill Clinton’s 1996 welfare reform bill.
The idea of fighting poverty through a child allowance has been making the rounds in left-wing policy circles for several years now. The People’s Policy Project’s Matt Bruenig has advocated it since at least 2013. Bennett and Brown’s own bill is largely patterned on a proposal by a well-known group of academics including Columbia University’s Jane Waldfogel, Johns Hopkins’s Kathryn Edin, and the University of Michigan’s Luke Shaefer.
One major reason anti-poverty advocates have been so keen on bringing a child allowance to the United States is that they believe programs that are universal—or close to it, at least—will have more staying power than programs narrowly tailored to the needy. Before it was decimated, the country’s old pre-Clinton welfare system was caricatured as a give-away to shiftless single-parents who refused to work. A program that supports a broad swath of the middle class as well as the poor would be much less vulnerable to cuts, the logic goes.
“I’ve really grown to think that simple and near universal is better,” Michigan’s Shaefer told me. “I think [Bennet and Brown’s bill] lives up to what we need as a cash safety net, a base level that families can’t fall behind, while providing a tax cut to middle class families all in one fell swoop.”
Of course, creating a big, near-universal program is more expensive than targeting something specifically to the poor. Exactly how expensive is unclear. Bennet’s office told me they don’t have a cost estimate for their bill yet. The proposal by Waldfogel, Edin, Schaefer, et al. would have cost $108 billion per year, according to its authors—but it was also more expansive, since its benefits didn’t phase out at upper incomes. It may be useful to think of that as a ceiling.
It’s also helpful to think about what a program like this might cost compared to the giveaways Republicans are planning for their wealthy donors. The budget Congress passed today in preparation for its tax bill leaves room for $1.5 trillion in deficits. Meanwhile, Bennet and Brown’s idea likely costs somewhere under $1 trillion. In other words, cutting the child poverty rate in half—and giving the middle class a break to boot—could end up cheaper than Trump’s tax cut for the wealthy.
To be fair, Republicans are planning to increase the child tax credit as part of their reform effort. But as of now, it looks like that change will mostly just replace current tax breaks for parents that Republicans plan to eliminate; it may keep families from seeing their taxes go up, but it is unlikely to bring them far down. Beyond that, it’s not clear if they plan to deal with the refundability issue at all. All of which suggests Brown and Bennet’s idea to create a child allowance probably isn’t going to have notable bipartisan support any time in the near future.
But the fact that they’re willing to back it speaks to the interesting policy fermenting among Democrats in Congress right now. Rather than merely sit back in opposition, senators have been rolling out a number of bold ideas to further build the safety net down the line—from single-payer health care, to versions of the public option, to (as of now) the child allowance. Brown and Bennet’s supercharged Child Tax Credit may not get widespread attention right now, but if one of them runs for president—many view Brown as a likely candidate if he can first win re-election in Ohio next year—it’s easy to see the plan being central plank of their platform. My guess is it’ll be far more popular than anything Trump’s now up to.
Correction, Oct. 26, 2017: This post previously misspelled the name of Sen. Michael Bennet.