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| Lucy Nicholson/Reuters |
Their plans for an enhanced child tax credit amount to a guaranteed income for parents.
The most expensive provision in the reconciliation bill is the new, enhanced child tax credit (CTC). For families who pay no federal income tax, the new CTC provides a cash benefit of up to $3,600 for each child under age 6 and $3,000 for each child ages 6 to 17 — more than twice the amount that families can receive from the old “additional child tax credit” (ACTC) that the CTC would replace. The new program also would do away with the old ACTC’s work requirements, making it very much like traditional cash welfare. The New York Times wrote that it has “the makings of a policy revolution” because it creates a guaranteed income for parents.
Any “revolution” intended to address a social problem should cause us to reflect on why the problem exists in the first place. And yet neither the program’s critics nor its supporters have acknowledged the enormous role that immigration policy plays in adding to child poverty in the U.S. If child poverty is a social problem requiring large, no-strings-attached income transfers, then why do we have an immigration policy that adds to the problem, making it ever more difficult and costly to address? If we want to have less poverty in America, we are going to have to look hard at policies on immigration, legal and illegal.
In 2019, before the COVID lockdowns caused a spike in poverty, about 31 percent of children with U.S.-born parents had incomes below 200 percent of the poverty line. Virtually all of these families in or near poverty will receive the new CTC. For children with an immigrant parent (legal or illegal), the rate is 43 percent. One-third of all children in or near poverty have an immigrant parent, legal or illegal. These children are almost all American citizens, and their success in America should be important to all of us. But the challenges they face are an indication of the major role that immigration has had — and will continue to have, barring a policy change — in exacerbating child poverty.
If the new CTC passes in its proposed form, we will be spending roughly $95 billion a year on cash payments, about three times what the old ACTC cost. Based on income and number of dependents, my colleague Karen Zeigler and I estimate that 57 percent of legal-immigrant-headed families with children will get cash from the new program, as will 79 percent of illegal-immigrant-headed families. By comparison, 52 percent of native-headed families will receive payments. --->READ MORE HERE
The expanded Child Tax Credit (CTC) has already had an impact since it began delivering monthly checks in July to families with children ages 17 and under, with an immediate reduction in hardship. But a debate is arising over President Joe Biden's plan to extend the CTC through 2025, with some questioning whether the payments could convince some parents to drop out of the workforce.
Among them is University of Chicago economist Bruce Meyer, an expert on poverty and social safety net programs. His new analysis of the program estimates that as many as 1.5 million parents could leave the workforce due to the payments, or about 2.6% of all working parents.
But other economists are pushing back, saying there's no evidence that the CTC payments so far have impacted work participation among parents, for example.
Meyer's research comes on the heels of a suggestion from Senator Joe Manchin, a Democrat from West Virginia, that the expanded tax credit should include a work requirement. Under the American Rescue Plan, the CTC was expanded from $2,000 per child to as much as $3,600 per child, with half of the credit arriving in the form of monthly checks from July through December 2021. Parents don't need to work to receive the tax credit and its monthly payments. It's an entitlement based on family income.
Questions about the structure of the CTC are arising as lawmakers debate Mr. Biden's wide-ranging American Families Plan, which would extend the expanded tax credit through 2025. Because the earlier version of the CTC required families to have a tax liability — in other words, to earn money and owe taxes on it — to receive the full credit, that provided a form of work incentive, University of Chicago's Meyer said.
"The proposed expansion would get rid of the strong work incentives under the prior CTC; it would essentially eliminate a tax credit that encouraged work and replace it with something that discourages work," Meyer told CBS MoneyWatch. "In the end, those at the bottom may not be better off." --->READ MORE HEREFollow link below to a related piece:
Biden's Child Tax Credit Result- More Folks UNWILLING TO WORK
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