Child Tax Credit Research Articles

What kind of “poverty” predicts CPS contact: Income, material hardship, and differences among racialized groups

Background and PurposeChild protective services (CPS) contact is consistently linked with poverty in the US, and empirical evidence is mounting to indicate that disparate exposure to income poverty explains a substantial portion of racial inequities in CPS involvement. Evidence about the different distributions of income poverty and material hardship also suggests that income poverty may not sufficiently capture economic wellbeing among families. This paper assessed whether differences in exposure to income poverty and/or material hardship explain racial inequities in CPS contact and further examined whether income poverty and material hardship predict CPS contact differently within racialized groups. MethodsWe used data from the Fragile Families and Child Wellbeing Study (FFCWS), an urban cohort representative of births in large US cities in 1998–2000. The FFCWS data are ideal for this study in capturing each of the key constructs: racialized group membership, income, material hardship, and CPS contact. We measured income poverty and material hardship when children were age 1 and measured any CPS contact by age five. Our final sample included 3,517 families, including 1,848 Black, 614 white, and 1,055 Latinx families. We employed logistic regression to assess the associations between income poverty and material hardship, independently and jointly, and CPS contact. We conducted analyses in our full analytic sample and among subsamples of the Black, white, and Latinx families. ResultsWe found that differences in income-to-poverty ratio account for differences in CPS contact between Black and white families. Differences in CPS contact between Black and Latinx families were not explained by economic wellbeing measures alone but were ameliorated when differences in income poverty, material hardship, and a full set of family characteristics were considered. Additionally, we found that material hardship was a consistent predictor of CPS contact in the full sample and within each of the Black, white, and Latinx subsamples, even accounting for differences in income and other family characteristics. ConclusionsThe clear role of income poverty in explaining inequities in CPS contact between Black and white families and the consistent importance of material hardship in predicting CPS contact across all families underscore the critical importance of reducing income poverty and hardship and of distinguishing material need from maltreatment in the context of CPS. Our findings offer clear implications for policy intervention to reduce income poverty and material hardship. Such interventions might include extending the temporarily expanded Child Tax Credit and expanded food and housing assistance benefits, toward the ends of supporting child and family wellbeing and reducing economic and racial inequities in CPS contact.

Who Benefits from the Child Tax Credit?

The Child Tax Credit (CTC) provides cash transfers to millions of families in the United States. We examine the distributional effects of the rules governing the credit, focusing on the rules governing years prior to 2021. We document striking disparities in eligibility by income and race. For instance, three-quarters of white children are eligible for the full CTC, compared with only about half of Black and Hispanic children. We estimate the distributional effects of a range of reforms to the CTC eligibility rules, demonstrating how such reforms could more evenly distribute the credit by race and income.

Tax filing and take-up: Experimental evidence on tax preparation outreach and benefit claiming

The U.S. federal government, states, and non-profits all devote substantial resources to increasing take-up of refundable tax credits like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) through educational outreach. We study a different approach to increasing take-up: policies that encourage tax filing. In a large field experiment, we find that IRS letters about free tax preparation modestly increased filing, with a large share of the new filers claiming the EITC and the CTC. The results suggest policies that increase filing can be an effective way to increase take-up of tax-administered social benefits, even policies that do not raise awareness of the benefit itself.

Association of the Implementation of Child Tax Credit Advance Payments With Food Insufficiency in US Households

A key component of the American Rescue Plan Act of 2021 included an expansion of the Child Tax Credit with advance payments beginning in July 2021, a "child allowance" that was projected to dramatically reduce child poverty. Food insufficiency has increased markedly during the economic crisis spurred by the COVID-19 pandemic, with disparities among marginalized populations, and may be associated with substantial health care and social costs. To assess whether the introduction of advance payments for the Child Tax Credit in mid-July 2021 was associated with changes in food insufficiency in US households with children. This cross-sectional study used data from several phases of the Household Pulse Survey, conducted by the US Census Bureau from January 6 to August 2, 2021. The survey had 585 170 responses, representing a weighted population size of 77 165 153 households. The first advance Child Tax Credit payment, received on July 15, 2021. Household food insufficiency. The weighted sample of 585 170 respondents was mostly female (51.5%) and non-Hispanic White (62.5%), with a plurality aged 25 to 44 years (48.1%), having a 4-year degree or more (34.7%) and a 2019 household income of $75 000 to $149 999 (23.1%). In the weeks after the first advance payment of the Child Tax Credit was made (July 21 to August 2, 2021), 62.4% of households with children reported receiving it compared with 1.1% of households without children present (P < .001). There was a 3.7-percentage point reduction (95% CI, -0.055 to -0.019 percentage points; P < .001) in household food insufficiency for households with children present in the survey wave after the first advance payment of the Child Tax Credit, corresponding to a 25.9% reduction, using an event study specification. Difference-in-differences (-16.4%) and modified Poisson (-20.8%) models also yielded large estimates for reductions in household food insufficiency associated with the first advance payment of the expanded Child Tax Credit. This study suggests that the Child Tax Credit advance payment increased household income and may have acted as a buffer against food insufficiency. However, its expansion and advance payment are only a temporary measure for 2021. Congress must consider whether to extend these changes or make them permanent and improve implementation to reduce barriers to receipt for low-income families.

The Effects of the 2021 Monthly Child Tax Credit on Child and Family Well-Being: Evidence from New York City

The temporary monthly child tax credit implemented in 2021 had the potential to affect many aspects of child and family well-being, including poverty, hardship, use of food pantries, spending on child-related items, and parents’ mental health and employment. The authors assess these effects using data from two longitudinal studies of well-being in New York City. They find that the monthly child tax credit led to significant declines in the risk for facing material hardship, multiple hardships, running out of money, and using food pantries. The authors do not find evidence of significant changes in parents’ mental health, employment, or spending on childcare or enrichment activities.

Real-Time Poverty, Material Well-Being, and the Child Tax Credit

Real-Time Poverty, Material Well-Being, and the Child Tax Credit

Effects of the 2021 Expanded Child Tax Credit

Effects of the 2021 Expanded Child Tax Credit

Effects of the Expanded Child Tax Credit on Employment Outcomes: Evidence from Real-World Data from April to December 2021

Effects of the Expanded Child Tax Credit on Employment Outcomes: Evidence from Real-World Data from April to December 2021

The Benefits and Costs of a Child Allowance

AbstractThis article conducts a benefit-cost analysis of a child allowance. Through a systematic literature review of the highest quality evidence on the causal effects of cash and near-cash transfers, this article produces core estimates on the benefits and costs per child and per adult of increasing household income by $1000, which can be used for any cash or near-cash program that increases household income. We then apply these estimates to three child allowance proposals, with the main proposal converting the $2000 Child Tax Credit in the federal income tax code into a fully refundable and more generous child allowance of $3600 per child ages 0–5 and $3000 per child ages 6–17, as enacted for 1 year in the American Rescue Plan. Aggregate costs and benefits are estimated via micro-simulation. Our estimates indicate that making the $2000 Child Tax Credit fully refundable and increasing benefits to $3000/$3600 would cost $97 billion per year and generate social benefits of $929 billion per year. Sensitivity analyses indicate that the results are robust to alternative assumptions and that each of the three child allowance proposals produces a very strong to an extraordinarily strong return for the U.S. population.

The 2021 Joseph St Geme, Jr, Leadership Award Address: The Role of Structural Racism in Injuries to Children and Adolescents.

The 2021 Joseph St Geme, Jr, Leadership Award Address: The Role of Structural Racism in Injuries to Children and Adolescents.

Extending the Child Tax Credit to Break the Cycle of Poverty

Extending the Child Tax Credit to Break the Cycle of Poverty

Ending Child Poverty by Investing in Children and Families.

Ending Child Poverty by Investing in Children and Families.

Why We Need a Permanent Expanded and Improved Child Tax Credit.

On thursday, july 15, 2021, when parents checked their bank balances, they found an additional $250, $300, or more, deposited. This money was the first monthly payment of the expanded and improved Child Tax Credit signed into law by President Joe Biden as a part of the American Rescue Plan. This monthly payment is the result of more than 18 years of fighting for a child allowance and finding what poverty scholars have known for very long—a fully refundable Child Tax Credit, in combination with other antipoverty measures, would reduce child poverty by 50% over the next decade.

US Healthcare Policy and Child Poverty.

Reducing child poverty is no longer an unrealized aspiration of advocates and pediatricians. With the expansion of the child tax credit in the American Rescue Plan, it has become, finally, a viable goal on the national agenda. A timely question is what health care policy can do to advance this goal. The answer starts with appreciating the role of the US health care system in fostering economic hardship in the first place.

The Evolution and Impact of Federal Antipoverty Programs for Children.

Despite our wealth, child poverty in the United States remains too high. The social safety net prevents and mitigates poverty for millions of children each year and evidence demonstrates long-term positive effects for recipients. But absent a commitment to universalism, our public investments in children produce uneven - and often inequitable - results. Our current system is heavily means-tested and work-conditioned. Though heavily targeted, it varies widely in adequacy and coverage by location and across population groups and it fails to serve all children in need. This article describes the evolution of the US social safety net for children over the last century. It traces the early 20th century origins of the contemporary system and the changes it saw through the mid-century's War on Poverty expansions and late 20th century's welfare reforms. Focusing specifically on federal cash and near-cash programs, it discusses key facets and principles of the current social safety net structure, its impact on children's health and economic well-being, remaining gaps, and promising advances for the future. Temporary improvements to the social safety net enacted as part of the pandemic response indicate important ways in which our public supports can reach more families, more consistently, moving forward. To reduce child poverty, one of the most promising approaches is to enact a national child allowance in the United States. Converting the existing Child Tax Credit into a universal child allowance, making it more generous, and delivering it to families on a regular basis throughout the year can accomplish this goal.

Supporting youth mental health during the COVID-19 pandemic.

Supporting youth mental health during the COVID-19 pandemic.

Tax Equality for Immigrants: The Indispensable Ingredient for Remedying Child Poverty in the United States

Both at the federal and state levels, tax credits have proved effective policy instruments to combat poverty, and they are at the heart of President Biden's massive initiative on childhood poverty. However, about one of every five children suffering poverty in the United States has an unauthorized immigrant parent and thus little or no access to tax credits. That is nearly two million children, and 85 percent of them are US citizens. Achieving historic reductions in childhood poverty thus will be impossible without remedying the eligibility exclusions and bureaucratic impediments that unauthorized immigrants face in the US tax system. All individuals who make money and reside in the United States are obliged to pay federal income taxes via a return filed with the Internal Revenue Service (IRS). For unauthorized immigrants and others who do not qualify for a Social Security Number (SSN) that requires an Individual Taxpayer Identification Number (ITIN). In this two-tier system, ITIN filers have the same income tax due as Social Security filers, but they do not receive the same credits. ITIN filers have never been eligible for the Earned Income Tax Credit (EITC) and some of their children were excluded from the Child Tax Credit (CTC) in the Trump administration's 2017 tax bill. Both credits are highly effective anti-poverty programs, providing immediate relief while also incentivizing work and earnings. The tax credits are the critical policy tool in Biden's American Plan for reducing child poverty, and they would be funded through the budget reconicilation legislation devised by Congressional Democrats in the summer of 2021. As summer drew to a close, ITIN inclusion was beginning to enter the discussion among advocates and legislators about the bill's detailed provisions. But eligibility is not the only barrier. Internal government monitors have repeatedly criticized the IRS for heavy-handed and inefficient practices that have placed undue burdens on ITIN taxpayers and that have hindered compliance with the law. The use of ITINs has plummeted in recent years from a high of 4.6 million returns in 2014 to 2.5 million in 2020. Prompted by the economic losses and the medical toll suffered by unauthorized immigrants during the pandemic and by their newly valued roles as “essential workers,” the federal government and several state governments have taken important steps to lessen the exclusion of ITIN taxpayers. The first federal stimulus package excluded not only ITIN holders but also their family members with SSNs. Congress extended eligibility to members of ITIN households with SSNs for the second and third stimulus checks. Meanwhile, California, Colorado, Maryland, New Mexico, Washington, Maine, and Oregon broke with the federal government and made ITIN filers fully eligible for their state EITCs, and as of July 2021 similar measures were under consideration in four other states. Early evidence from California and Colorado suggests that ITIN inclusion could prove a highly effective means of reaching poor children with the benefits of a state EITC. Child poverty can only be attacked successfully if ITIN households receive equal access to federal and state tax credit programs. This can be accomplished if: Congress and state legislatures permit full eligibility for all EITC and CTC programs. Congress mandates reforms to the procedures for getting and keeping an ITIN that have been proposed in multiple reports to Congress by the Taxpayer Advocate Service, an internal monitor at the IRS. Immigrants’ rights advocates and other civil society organizations, with government support, undertake a multi-year campaign to encourage ITIN application and use. The IRS receives funding to support a greatly expanded ITIN program.

Book Reviews

Book Reviews

Summaries of Articles

Summaries of Articles

Estimating the Distributional Implications of the Tax Cuts and Jobs Act

This paper provides a distributional analysis of the Tax Cuts and Jobs Act (TCJA), with implications for American households from changes to the individual income and corporate income taxes. We model the impact on average tax rates and after-tax incomes using tax records data from the 2011 Internal Revenue Service public use file and the open-source Tax-Calculator microsimulation model. We find that the effects of the TCJA vary widely across and within income deciles depending upon family structure, the choice of equivalence scales, and whether the impacts are short term or long term. When appropriately accounting for differences in tax unit size, through 2025 the individual income tax changes of the TCJA appear progressive. Failing to account for these differences obscures these progressive effects because larger families benefiting from the expansion of the child tax credit have higher incomes. Combining individual income and business tax provisions in the static scenario, the TCJA is likely to result in short-term increases in after-tax incomes across all deciles, with longer-term decreases for the lower-income households if the individual income tax provisions are allowed to expire. Even in the short run, the gains are significantly lower for those below the top decile. In the long-run dynamic scenario, the TCJA appears regressive, with income gains skewed toward the top.