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5 Ten Policy and Program Approaches to Reducing Child Poverty
Pages 133-172

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From page 133...
... Chapter 6 presents four policy and program packages containing two or more of the options presented in this chapter. We find considerable merit to a "package" approach to child poverty reduction because it provides an opportunity to combine options that generate complementary impacts on poverty reduction, work incentives, and other important criteria.
From page 134...
... In the case of the minimum wage, for example, there is a fairly robust research consensus concerning the impacts of modest changes to the minimum wage (U.S. Congressional Budget Office, 2014)
From page 135...
... A child allowance (which can also be thought of as an extension of the federal child tax credit)
From page 136...
... Conversely, behavioral responses will reinforce poverty reduction if they increase work and earnings. Behavioral responses also include changes in marital status and living ar rangements, as well as changes in childbearing, that may result from changes in policy.
From page 137...
... 1. Modifications to the Earned Income Tax Credit (EITC)
From page 138...
... 2. Modifications to Child Care Subsidies We examined two expansions of federal programs providing child care assistance, one involving the Child and Dependent Care Tax Credit 1 A large body of research shows that the presence (or the expansion)
From page 139...
... : Child Care Policy #1: Convert the CDCTC to a fully refundable tax credit and concentrate its benefits on families with the lowest incomes and with children under the age of 5. Child Care Policy #2: Guarantee assistance from CCDF for all eligible families with incomes below 150 percent of the poverty line.
From page 140...
... Details on these two policy options are provided in Appendix D, 5-4. Increases in the minimum wage have the potential to boost the earned income of low-skilled workers, some of whom reside in families with children and below-poverty household incomes.
From page 141...
... A higher minimum wage could also reduce the federal cost of supporting people who are poor, because higher earnings would reduce outlays on SNAP and housing programs while increasing payroll and income taxes. Conversely, a higher minimum wage could increase the cost of programs like the EITC.
From page 142...
... , earnings alone are insufficient for many families to lift themselves out of poverty. While one strategy for boosting the incomes of low-income working families focuses on benefit programs such as the EITC and the Child Tax Credit, another involves training and employment programs designed to increase the job skills and employability of low-skilled workers, thereby boosting the market wages they can earn.
From page 143...
... . Despite that paucity of evidence, the committee judged that for one employment program -- called WorkAdvance -- the evaluation evidence was sufficiently encouraging that we could feature an expansion of it as one of the program and policy options in this chapter.
From page 144...
... Child health outcomes show improvements right away, while adult health shows improvements in the longer term. Additionally, as shown in Chapter 4, SNAP lifts more children out of deep poverty than any other program, and only the EITC (and other tax credits)
From page 145...
... Congressional Budget Office, 2014) , the three largest being the Housing Choice Voucher Program, public housing, and the Low-Income Housing Tax Credit (LIHTC)
From page 146...
... The committee chose to model expansions of voucher availability rather than other modifications, such as an increase in the level of housing subsidies, primarily because most experts agree that limited availability is currently the primary barrier preventing subsidized housing programs from having a larger impact on poverty reduction. As noted above, the 70 percent take-up rate chosen for simulation by the committee represents the maximum take-up rate possible, and hence no higher level could be simulated.
From page 147...
... .5 Moreover, family incomes need to be below 100 percent of the federal poverty line for a child to qualify for full benefits. Benefits decline as earnings rise, with eligibility phasing out completely at about 200 percent of the federal poverty level (Romig, 2017)
From page 148...
... (As with Child Allowance Policy #1, we would eliminate the Child Tax Credit and Additional Child Tax Credit as well as the dependent exemption for children.) The child allowance benefit would be phased out between 300 and 400 percent of the poverty line.
From page 149...
... : Child Support Assurance Policy #1: Set guaranteed minimum child support of $100 per month per child. Child Support Assurance Policy #2: Set guaranteed minimum child support at $150 per month per child.
From page 150...
... Drawing from the experience of Sweden (Garfinkel, 1994b) , a publicly financed minimum child support benefit -- one that is conditional on the custodial parent being legally entitled to receive private child support -- reduces the poverty and insecurity of single mothers and their children.
From page 151...
... child population and having higher poverty rates than children in nonimmigrant families, the committee proposed two changes to immigrant program eligibility with considerable potential for reducing poverty among children in immigrant families. These proposals were also chosen to address another criterion the committee set for itself: social inclusion.
From page 152...
... The more substantial child allowance option, which would replace the child tax credit and child tax exemption with a universal $3,000 payment per child per year, comes closest. It would generate a 5.3 percentage point reduction in poverty.
From page 153...
... SOURCE: Estimates from TRIM3 commissioned by the committee. NOTE: EITC – Earned Income Tax Credit; SNAP – Supplemental Nutrition Assistance Program; SSI – Supplemental Security Income SOURCE: Estimates from TRIM3 commissioned by committee
From page 154...
... Those benefit increases are much larger than the increases proposed in the child support assurance proposal or the earnings increases that would accrue from a higher minimum wage. But the greater poverty-reducing impacts of these three proposals, as well as the 70 percent housing voucher program, also reflect their near-universal coverage of low-income families with children.
From page 155...
... SOURCE: Estimates from TRIM3 commissioned by the committee. NOTE: EITC – Earned Income Tax Credit; SNAP – Supplemental Nutrition Assistance Program; SSI – Supplemental Security Income SOURCE: Estimates from TRIM3 commissioned by committee
From page 156...
... Two involve existing programs -- the Supplemental Nutrition Assistance Program and housing vouchers. The option of a 40 percent increase in Earned Income Tax Credit benefits would also reduce child poverty substantially.
From page 157...
... SOURCE: Estimates from TRIM3 commissioned by the committee. NOTE: EITC – EITC = Earned Income Tax Credit; CC = Child Care; MW = Minimum Wage; WA = Work Advance; SNAP = Supplemental Nutrition Assistance Program; HV = Housing Vouchers; SSI = Supplemental Security Income; CSA = Child Support Assurance; CA = Child Allowance; IMM = Immigrant SOURCE: Estimates from TRIM3 commissioned by committee
From page 158...
... . Child Care Policy #1: Convert the Child and Dependent Care Tax Credit (CDCTC)
From page 159...
... (In implementing this new child allowance, elim inate the Child Tax Credit and additional child tax credit as well as the dependent exemption for children.) Phase out child allowance benefits between 300 percent and 400 percent of the poverty line (CA2)
From page 160...
... For example, in the case of the first child care policy, which would expand the Child and Dependent Care Tax Credit, the induced employment changes not only increase poverty reduction but also increase government cost by roughly a factor of four but also nearly triple program costs. 9 As shown in Appendix E, tradeoffs between poverty reduction, earnings, and employment are affected very little by the 2018 tax reforms.
From page 161...
... NOTE: Earnings changes are limited to individuals living in households with incomes below 200 percent of SPM poverty. or policy.= It is important CC = Child Care; MW = the earnings= Work Advance; SNAP = Supplemental Nu EITC Earned Income Tax Credit; to note that Minimum Wage; WA and employment changes trition Assistance Program; HV = Housing Vouchers; SSI = Supplemental Security Income; CSA = Child Support Assurance; plotted = Child Allowance;limited to workers in low-income families, defined as CA here are IMM = Immigrant havingSOURCE: Estimates from TRIM3 commissioned by committee of SPM poverty.
From page 162...
... By contrast, SNAP, subsidized housing, and child allowance programs are estimated to reduce earnings by amounts ranging from $1 billion to $6 billion. An interesting combination of substantial reductions in the number of poor children and substantial earnings increases is projected for Child Care Policy #1, which converts the Child and Dependent Care Tax Credit into a fully refundable tax credit.
From page 163...
... NOTES: Job changes are limited to individuals living in households with incomes below 200 percent of SPM poverty. CA = Child Allowance; CC = Child Care; CSA = Child Support Assurance; EITC = Earned Income Tax Credit; HV = Housing V ­ ouchers; IMM = Immigrant; MW = Minimum Wage; SNAP = Supplemental Nutrition Assistance Program; SSI = Supplemental Security Income; WA = WorkAdvance.
From page 164...
... Down the first column of the table are the proportionate reductions in overall child poverty associated with each of the program and policy options. For example, the "−9.4%" entry for the first EITC option indicates our estimate that implementing this policy would reduce the overall number of children with family incomes below the poverty line by 9.4 percent.12 The green and red circles and the vertical dashes across the first row indicate whether the percentage reduction in poverty for children from the first EITC option in the given subgroup is larger (green)
From page 165...
... A second general lesson is that few of the program and policy options provide substantially disproportionate benefits for most of the subgroups listed in the table. Exceptions are the two child allowance proposals, which disproportionately benefit all groups other than noncitizens and Hispanic children.
From page 166...
... . The light green circles for <100 percent and <150 percent SPM poverty reduction indicate modest relative success in reducing poverty under those two definition, while the two light red circles indicate above-average cost and somewhat worse performance in reducing poverty gaps for the demographic subgroups we have been considering.
From page 167...
... CONCLUSION 5-6: The work-oriented program and policy options in our simulations would increase employment and earnings but are among the weakest options in reducing child poverty and, especially, deep child poverty. Three sets of means-tested programs -- expansions of Supplemental Nutrition Assistance Program benefits, housing vouch ers, and a new child allowance -- would reduce poverty the most but would also reduce employment and earnings.
From page 168...
... 2. A $2,000 per year monthly child allowance would strongly reduce child poverty and deep poverty, which most research suggests would promote child development as well as social inclusion.
From page 169...
... . Labor supply response to the earned income tax credit.
From page 170...
... . Welfare, the Earned Income Tax Credit, and the labor supply of single mothers.
From page 171...
... . The Earned Income Tax Credit.


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