[US Reps. Rashida Tlaib and Ilhan Omar just introduced the End
Child Poverty Act, which would set up a universal child benefit.
It’s a major improvement on previous proposals to help poor and
working-class families — and would instantly slash child poverty.]
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RASHIDA TLAIB AND ILHAN OMAR’S END CHILD POVERTY ACT IS A POLITICAL
AND POLICY HOME RUN  
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Matt Bruenig
April 7, 2023
Jacobin
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_ US Reps. Rashida Tlaib and Ilhan Omar just introduced the End Child
Poverty Act, which would set up a universal child benefit. It’s a
major improvement on previous proposals to help poor and working-class
families — and would instantly slash child poverty. _

Representatives Ilhan Omar and Rashida Tlaib hold a news conference
on August 19, 2019 in St Paul, Minnesota., Adam Bettcher / Getty
Images

 

The 2021 version of the Child Tax Credit (CTC) was a big improvement
over prior and current versions. Unlike those other iterations, the
2021 CTC was fully refundable, meaning that no child was too poor to
be eligible for the full benefit amount, and it was partially paid out
monthly rather than as a lump sum at tax time in the subsequent year.
These features, along with the higher benefit amount, made the program
more effective at reaching children in lower-income families.

But the 2021 CTC was also flawed in a number of ways that hugely
limited its effectiveness. The next time lawmakers try to enact a
similar child benefit, they should pass a better version that fixes
the flaws of the first one. The End Child Poverty Act (ECPA), which
was reintroduced (one-pager
[[link removed]], bill
text
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yesterday by representatives Rashida Tlaib, Ilhan Omar, and Chuy
García, would do precisely that.

There were three major problems with the design of the 2021 CTC that
the ECPA does not have:

* USING THE TAX-FILING SYSTEM TO ADMINISTER BENEFITS EXCLUDES
CHILDREN IN NON-FILING TAX UNITS. Families with income below a certain
level are not required to file tax returns, and many of them do not.
Using the tax-filing system thus results in many children, especially
very poor children, not receiving the benefits they are owed. This
problem has long plagued
[[link removed]] the Earned
Income Tax Credit (EITC) and dragged
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effectiveness of the 2021 CTC. This is also a major problem
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Canada, which similarly uses the tax-filing system to administer its
child benefit.
* USING AN INCOME TEST CREATES UNNECESSARY ADMINISTRATIVE BURDENS
THAT RESULT IN BENEFIT CLAWBACKS. The 2021 CTC began phasing out at
$112,500 of income for single parents and $150,000 of income for
married parents, and then again at $200,000 of income for single
parents and $400,000 for married parents. To regularly administer this
phaseout, the Internal Revenue Service (IRS) would have to collect
information on the parental marital status, tax-filing status, family
income, and tax unit location of every kid every year. It would also
have to guess what this information is going to be in advance, because
such information is not knowable until the last day of every year.
Incorrect guesses would result in incorrect payments, necessitating
quite painful benefit clawbacks in some cases.
* THE 2021 CTC ONLY MADE HALF OF THE NATION’S CASH CHILD BENEFITS
FULLY REFUNDABLE. The United States has two major cash benefits for
children: the CTC and the EITC. Both benefits use earnings-based
phase-ins so as to exclude the poorest children from eligibility. The
2021 CTC got rid of that phase-in but only for the CTC, not for the
EITC, despite the fact that the programs are virtually identical and
serve the same basic purpose. This means that, even in 2021, the
overall US child benefit system was still not fully refundable to the
poorest kids.

The ECPA fixes all of these problems and, if passed, would be
radically more effective at achieving the aims of the 2021 CTC.

* THE ECPA USES THE SOCIAL SECURITY ADMINISTRATION (SSA) TO
ADMINISTER BENEFITS, NOT THE TAX-FILING SYSTEM. Not all children live
in families that file taxes. But all children are registered with the
SSA at birth, typically at the hospital
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birthing process. The SSA also has 1,500 customer-facing offices
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the country and sends
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70.8 million people each month, including to 4.9 million children. For
these reasons, the SSA would be far better at reaching every kid in
the country than the tax-filing system is.
* THE ECPA DOES NOT HAVE AN INCOME TEST. Having no income test
means that the SSA does not need to collect information about the
parental marital status, tax-filing status, family income, and tax
unit location of every kid every year. It also means that parents do
not need to submit that information. Instead, once a child is enrolled
at birth, the SSA can simply make the child benefit payment every
month until a child’s nineteenth birthday. After birth, parents
would never need to interact with the agency again unless there was a
custody change or some other event that necessitated a change in the
payee for the child’s benefit. The ECPA approach still enables the
government to limit the disposable incomes of high earners, because
that can still be achieved through ordinary taxes rather than
administratively burdensome benefit phaseouts.
* THE ECPA REPLACES THE CTC AND THE EITC. The basic reform of the
ECPA is to replace the CTC and the EITC with a universal
SSA-administered benefit equal to the difference between the
one-person poverty line and the two-person poverty line. In 2023
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that would be $5,140 per year or $428 per month. From there, the ECPA
ties up some loose ends caused by this change through small
modifications to tax credits for adults. So, unlike the 2021 CTC, this
reform would actually make the poorest children eligible for the full
slate of US child benefits, not just half of them.

Overall, the ECPA is just a much better-designed way to implement the
kind of monthly child benefit that almost all Democrats in Congress
support. It is understandable why, in the crunch of passing a
temporary program as part of a COVID stimulus package, Democrats
decided that the best they could do was have the IRS basically turn
the CTC into a monthly child-only stimulus payment. But in a
nonemergency situation in which the Democrats now have time to
actually plan out what they would like the permanent version of this
benefit to look like, it is hard to see how any of them can think the
2021 CTC is better than the child benefit in the ECPA.

For the sake of good government, good policy, and actually designing a
child benefit that can reach the kids who need it the most, I
sincerely hope the ECPA becomes the mainstream Democratic proposal in
this policy area.

* Child Poverty
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* legislation
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* IRS
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* Social Security
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