Not much known is the new expanded child tax credit in Biden's 1.9T American Rescue Plan act (3rd covid) package. While the media coverage of the expanded credit has focused on cutting child poverty in half (lift 4.1m children out of poverty), it's much broader and more significant in that it touches nearly every single family. Full credit of $3600 per child under age 7 and $3000 per child from ages 7-17 for families with income up to 150k (married couples) or 112.5k (single heads of household). It starts to phase out after that. Families with income up to 400k will get partial credit. It does not phase out at the lower end of income - families with tax liability less than the credits will get the full credit. Biden's admin plan is to send monthly Child Tax Credit checks to families and Democrats want to make them permanent. If this happens: A family with 4 kids will receive 12k to 14.4k per year, or 1k-1.2k per month A family with 3 kids will receive 9k to 10.8k per year, or $750-$900 per month A family with 2 kids will receive 6k to 7.2k per year, or $500-$600 per month For 2021, the monthly payment is half since half of it will be per month from July to Dec, while the other half will be paid through a tax refund. This policy is for only 2021 (limit of the reconciliation procedure) and is up for renewal in 2022. It can become permanent in a 2022 reconciliation or stand-alone bill with changes to filibuster. Should it be permanent? @Os Trigonum, here is a fine example of a huge policy difference between Biden/Dem and Trump/Rep in action with this package vs the Trump tax cuts for the wealthy in 2017. This UBI for family is part of a vision to build America from a vast base up (Biden/Dem), instead of from the very top-down, or so-called trickle-down economics (Trump/Rep).
I know the amount is being increased and more is refundable but basically this is just getting your tax return earlier for parents right? Since I have 2 kids I usually get $4k and now I will get $6k and half of that $500/month for 6 months. My question is If they turned the credit into UBI and just paid me $500/month all year every year till they were 18 would there be backlash as some people would have a tax liability that that credit used to take care of? I suppose with the truly poor the EITC would still be around. I can just see the people who would usually receive let’s say $1k tax return end up owing thousands because they received their money throughout the year. Kind of like people who don’t withhold enough so their checks are bigger but then have to pay in April. I’m all for making it permanent. Using the aforementioned it’s a clever way of turning refundable tax credits into UBI. While the GOP are of course anti UBI they would never get away with eliminating the child tax credits. This seems a small, easy transition into a larger societal benefit. That the Republicans will have difficulty quashing. Kudos Dems.
Yes. Good point on the potential backlash. That might be a reason why the Biden admin decided to split it for 2021. They could continue to split it or slowly transition to additional months of regularly payment until families are used to it, adjust to the changes and plan accordingly.
https://data.oecd.org/chart/6jQj The US has one of the highest child poverty rates in the developed world, I like it, I'd be fine with it being a heavier means test, a 400k cutoff is a bit silly, 80k cutoff would make more sense, with it starting to scale down starting around 40-50k or whatever. Those who are likely to truly be struggling get the much-needed lift, and the middle class gets a little bit of breathing room. On top of the necessity of a UBI aspect, on top of the importance of reducing child poverty, there's the angle of incentivizing the choice have children in general, which is going to be a big topic amongst all developed countries over the next 80 years. Are we going to be prepared to have a rapidly shrinking population with all that entails?
I like a low level UBI that still leaves plenty of incentive for people to earn more spending money. The USSR had a kind of UBI but then provided nothing other than the black market or climbing the party bureaucracy to let anyone really better their material life. But anything that inches us towards a country where families aren't one engine failure or one major surgery away from economic ruin and homelessness would be a good step in my book!
But then it wouldn't be a UBI. Technically, it's already not a true UBI (limited to families with kids and those making 400k or less; credit start decreasing after 150k). But practically, it has many aspects of a UBI for families with kids. Who is excluded? Around 1-2% of families make over 400k. And of course, there are people without kids. I think with the broad impact due to 400k cutoff and starting to scale down at 150k, it's much less susceptible to political attacks ("welfare queen" or "disincentivizing work"), similar to how Trump and Rep initially sold their tax package with huge tax breaks for the tops while nearly everyone else gets something. This is nearly every family gets something, but significantly much more impact on lower-income families.
Correction- under 6, not 7 that gets $3500. Some Republicans might support making this permanent. Romney proposed an even more generous cash benefits ($4200 for 0-5, $3000 for 6-17) earlier this year. Upward mobility, reduced crimes and better health (lower health care cost) are feature of UBI-like programs and those are additional benefits here. @ThatBoyNick on your "rapidly shrinking population" topic, an issue for industrialized countries... most of them already have a family allowance and there is some increase in birth rate due to the allowance. The contribution of increases in family benefits to Australia’s early 21st-century fertility increase: An empirical analysis (Volume 25 - Article 6 | Pages 215–244) (demographic-research.org) https://www.brookings.edu/blog/up-f...-poverty-now-and-boost-social-mobility-later/ Romney to propose annual cash benefit of $3,000 per child (yahoo.com)
Right, it wouldn't be, and like you said it already isn't, not only in it already being means-tested but also in being limited to a specific group in our population. When I look at this I don't see it as UBI as much as a more direct tool to use in an attempt to drastically lower child poverty in America. I'm open but unsure of an actual UBI, I do think something, whether it be UBI, or instead social programs, need to be an effective bridge to transfer of wealth to lower / middle income families, we clearly just can't continue to let tech advances in efficiency/production wipe out jobs, with all the wealth accumulating to a fraction of a percent of our country. To be clear, I'm pro-tech advancement, I'm pro efficiency obviously, and if that means jobs disappear then so be it, what needs to change is the distribution of the benefits of this production, unless we want to live in a world controlled by a handful of people ''cuz they deserve it". That being said, we haven't seen it implemented countrywide yet anywhere. That doesn't mean that it's not the answer and won't work, but I'd rather see it work in a smaller country before advocating for it here. What we have seen work is extensive, high-quality social programs. What I really hope we do, is take a look at what Finland and Denmark are doing to have a child poverty rate that is a whopping 1/5th (Jesus F'n Christ) of what ours is. https://www.sgi-network.org/2017/Finland/Social_Policies Finlands child allowance - https://www.kela.fi/web/en/child-benefit-amount-and-payment It increases for each kid you have, starting a 95 euros per month, to 183, with an additional 63 euros per month for single parents. Not as generous as the 3000/3600, but they have much better social programs, to begin with.
