A Universal Child Allowance: A Plan to Reduce Poverty and Income Instability among Children in the United States

• Published in: RSF : Russell Sage Foundation journal of the social sciences 2018-02, Vol.4 (2), p.22-42
• Main Authors: Shaefer, H. Luke, Collyer, Sophie, Duncan, Greg, Edin, Kathryn, Garfinkel, Irwin, Harris, David, Smeeding, Timothy M, Waldfogel, Jane, Wimer, Christopher, Yoshikawa, Hirokazu
• Format: Article
• Language: English
• Subjects: Access; Age; Child care; Child development; Child poverty; Child rearing; child tax credit; Children; Children & youth; Economic models; Economies of scale; Exemption; Expenditures; Families & family life; Food stamps; income instability; Income taxes; Labor market; Parents; Part I. Tax and Transfer Programs; Policy making; Poverty; School age children; social welfare policy; Tax benefits; Tax credits; Tax exemptions; Tax rates; Taxation
• ISSN: 2377-8253; 2377-8261; 2377-8261
• DOI: 10.7758/rsf.2018.4.2.02

To reduce child poverty and income instability, and eliminate extreme poverty among families with children in the United States, we propose converting the Child Tax Credit and child tax exemption into a universal, monthly child allowance. Our proposal is based on principles we argue should undergird the design of such policies: universality, accessibility, adequate payment levels, and more generous support for young children. Whether benefits should decline with additional children to reflect economies of scale is a question policymakers should consider. Analyzing 2015 Current Population Survey data, we estimate our proposed child allowance would reduce child poverty by about 40 percent, deep child poverty by nearly half, and would effectively eliminate extreme child poverty. Annual net cost estimates range from $66 billion to $105 billion.