The US$1.9 trillion coronavirus relief package President Joe Biden signed in March 2021 will expand the child tax credit for one year. Instead of providing families with up to $2,000 per child under 17, the government will distribute a total of $3,600 for each child under 6 and $3,000 for kids under 18.
Some economists predict that these payments, which will go to all but the wealthiest parents in two ways – monthly starting in July 2021 and as a lump sum when parents file their taxes in 2022 – could cut U.S. child poverty by nearly 50%. Today, about 1 in 7 U.S. children live below the official poverty line.
I’m a law professor who researches the often-humiliating and punitive hurdles that poor families face when they apply for some government benefits. From my perspective, this new approach to supporting families is important, and not just because it will reduce poverty. For one of the first times in modern U.S. history, it recognizes that nearly all U.S. families with children deserve support and treats them the same way.
Many Democrats in Congress want to make this policy permanent. If they succeed, nearly all families with children will be able to count on getting these benefits, much in the same way that senior citizens at all income levels receive Social Security payments.
Meager ‘welfare’ for low-income families
Conservative critics of the safety net often argue that Temporary Assistance to Needy Families, the income support program for families with children that many Americans simply call “welfare,” is large-scale and generous. But this program, known as TANF, does not begin to meet the needs of the nation’s poor families.
The cash it makes available varies by state. In Tennessee, where I live, a family of three receives $277.16 per month. Nationally, monthly benefits vary significantly, from a low of $170 per month for a family of three in Mississippi to a high of $1,086 for the same family in New Hampshire.
Even in New Hampshire, TANF does not lift families out of poverty. There, as in every state, people getting these benefits remain well below the poverty line. What’s more, American families can’t get these benefits for more than a total of five years.
In addition, the application process is often seen as deeply degrading, and once families do receive TANF benefits, they can easily lose them. If, for example, a parent misses one work-related appointment, if their child misses school or if they did not submit paperwork the state needs to seek child support, the state can cut off these benefits.
As a result, the majority of families who qualify do not receive TANF payments. In 2019, only 23 of every 100 eligible families got them.
For these poverty-focused programs, the paperwork is lengthy and complicated. Benefits can be contingent on time-consuming or onerous requirements, such as intensive job searches or drug tests. There are interviews about your history, your behavior and your choices. In some cases, a government official will inspect your home. Any information disclosed or discovered can be shared with other government agencies.
If, during that inspection, a caseworker sees something she thinks signals child neglect, like an empty refrigerator or a broken stove, the next person at the door could be from your local child protective services agency. If the caseworker does not like what she sees, she has the power to take your children away, and they could end up in foster care.
Having more money means easier access to benefits
What some people do not realize is that wealthier people get welfare too. In fact, tens of millions of Americans who are either middle-class or affluent get generous government benefits.
The government delivers these additional welfare benefits through tax breaks. And for Americans who are in the middle or upper class, getting government benefits is typically easy and reliable.
A well-off family may qualify for the mortgage-interest deduction because of the size of their loan and their income. They might get tax-free health insurance coverage or at least the opportunity to spend pre-tax dollars on their health insurance premiums through their job.
More than half of these tax breaks benefit the highest-earning Americans – people whose incomes are among the highest fifth of all earners. Only 4.3% of them support those in the bottom fifth of the income scale.
To get these benefits, you might have to fill out a form or check a box, but that’s it. Like clockwork, cash arrives or your tax bills are much lower than they’d otherwise be.
The tab for all this welfare really adds up.
The federal government spent about $1.3 trillion on these tax breaks in 2020, according to the Center for Budget and Policy Priorities. That think tank estimates that this totaled more than the combined cost of Medicaid and Medicare and around four times the approximately $364 million the government spent in 2020 on food assistance, housing aid and income support combined.
Permanently expanding the child tax credit along the lines of this year-long measure would cost the government about an estimated $160 billion annually over the next decade.
A step away from discrimination
The expanded child tax credit will benefit almost all families, and it will work the way benefits currently work for the wealthy.
About 93% of all families with children, from those at the very bottom to married couples earning up to $150,000 per year, will receive the same cash benefits, delivered monthly beginning in July 2021, to support their children.
Married couples with kids who are earning over $150,000 but less than $400,000 will still benefit but get a smaller tax credit. Only families making more than $400,000 will receive nothing.
Because the government will be treating everyone eligible in the same way – as families who need and deserve support – I see it as an important step away from a discriminatory system in which, all too often, poor people are shamed and rich people are supported.
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by : Wendy Bach, Professor of Law, University of Tennessee