Post by ck4829 on Feb 8, 2022 11:24:52 GMT
Less than one year ago, the United States government enacted one of the most effective anti-poverty programs in modern history. The Child Tax Credit (CTC), originally established in 1997, was expanded through the American Rescue Plan to provide families with children substantially larger payments, delivered monthly, while making low-income families eligible for the full benefits. This expansion changed the face of child poverty in the United States, lifting over 4 million children above the poverty line—a decrease in poverty of more than 40% — and decreasing food insufficiency for families with children by an estimated 26%.
Unfortunately, despite its transformative impact, the expansion of the CTC is now at risk of being lost. President Biden’s omnibus Build Back Better (BBB) legislation was intended to make the changes permanent, but blanket Republican opposition and concerns around cost from some centrist Democrats have now put the program into jeopardy. As negotiations continue around the policy, one proposal that’s reportedly gaining traction is to lower the eligibility income cap for the credit, making it available only to families earning less than $75,000. This would change the expanded CTC from a nearly universal program to one targeted to lower-income Americans.
If your priority is to lift children out of poverty, this may seem like a very reasonable change. Poor families remain eligible for the credit, and the lower price tag makes current negotiations easier and may help keep the program off the chopping block in the future. However, there’s a risk that by making the expanded CTC a more means-tested program, fewer poor children will end up receiving the support.
Unfortunately, despite its transformative impact, the expansion of the CTC is now at risk of being lost. President Biden’s omnibus Build Back Better (BBB) legislation was intended to make the changes permanent, but blanket Republican opposition and concerns around cost from some centrist Democrats have now put the program into jeopardy. As negotiations continue around the policy, one proposal that’s reportedly gaining traction is to lower the eligibility income cap for the credit, making it available only to families earning less than $75,000. This would change the expanded CTC from a nearly universal program to one targeted to lower-income Americans.
If your priority is to lift children out of poverty, this may seem like a very reasonable change. Poor families remain eligible for the credit, and the lower price tag makes current negotiations easier and may help keep the program off the chopping block in the future. However, there’s a risk that by making the expanded CTC a more means-tested program, fewer poor children will end up receiving the support.
While targeting programs seems like an efficient way to allocate resources, these programs often struggle with lower “take-up rates” than those that are more universal. Take-up rate is the percentage of families eligible for a program that actually receive the benefit, and it is often far below 100% — Temporary Assistance for Needy Families (TANF), the United States’ main cash welfare program, had an estimated 2016 take-up rate of only 24.9%. In 2019, the UK think tank Development Pathways conducted an analysis of social programs around the world, looking both at how specifically targeted those programs were and at their respective take-up rates. The results were stark: for highly targeted programs, at most 56% and as low as 3% of the intended populations actually received the benefits. In contrast, more universal programs had a far higher take-up rate, exceeding 90% in some cases.