A Roadmap to Reducing Child Poverty (2019) / Chapter Skim
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6 Packages of Policies and Programs That Reduce Poverty and Deep Poverty Among Children
6 Packages of Policies and Programs That Reduce Poverty and Deep Poverty Among Children
Pages 173-194
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From page 173... ...
or housing vouchers were relatively effective at reducing child poverty, but they also reduced employment and earnings. Work support programs such as EITC and the Child and Dependent Care Tax Credit (CDCTC)
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From page 174... ...
The fourth package, the "Universal Supports and Work Package," seeks to enhance income security and stability, reward work, and promote social inclusion. The cornerstone of this fourth package is a $2,700 per child per year child allowance, but the package also includes a new child support assurance program, an expansion of the EITC and CDCTC, an increase in the minimum wage, and elimination of the immigrant restrictions imposed by the 1996 welfare reforms.
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From page 175... ...
Means- Universal 1. Work- Universal Tested Supports Supports Oriented Supports and Work and Work Package Package Package Package Expand EITC X X X X Work-Oriented Programs and Expand CDCTC X X X X Policies Increase the X X Minimum Wage Roll out X WorkAdvance Expand Housing X Voucher Program Expand SNAP X Oriented Programs Benefits Income Support and Policies Begin a Child X X Allowance Begin Child X Support Assurance Eliminate 1996 Immigration X Eligibility Restrictions NOTE: CDCTC = Child and Dependent Care Tax Credit, EITC = Earned Income Tax Credit, SNAP = Supplemental Nutrition Assistance Program.
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From page 176... ...
A WORK-BASED AND UNIVERSAL SUPPORTS POVERTY-REDUCTION PACKAGE As shown above, the Work-Based Package is unable to make much of a dent in poverty and deep poverty among children, which led the committee to formulate three additional packages, all of which combine work-based and income-support strategies. In the case of our Work-Based Plus Universal Supports package, we combined three policies from Chapter 5 that proved to be unusually cost-effective in either reducing poverty and deep poverty or promoting work: • EITC Policy #1: Increase payments along the phase-in and flat portions of the EITC schedule.
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From page 177... ...
The committee therefore coupled these components with a relatively low-cost income support component also presented in Chapter 5: • Child Allowance Policy #1: Pay a monthly benefit of $166 per month ($2,000 per year) per child to the families of all children under age 17, which was estimated to reduce the child poverty rate by 3.0 to 3.4 percentage points and the 2.9 percent rate of deep poverty by 1.0 to 1.1 percentage points, depending on the prevail ing tax law.
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From page 178... ...
Work−Based and Universal Supports −4.6 –35.6% −1.2 −41.3% $44,536 $9,921 567,722 Expand EITC −1.2 −9.4% −0.2 −6.9% $8,384 $4,910 269,713 Expand CDCTC −1.2 −9.1% −0.3 −10.3% $5,141 $9,342 518,085 Begin a $2,000 child allowance −3.4 −25.9% −1.1 37.9% $32,904 –$1,627 −68,434 3. Means-Tested Supports and Work −6.6 −50.7% −1.5 −51.7% $90,732 $2,188 404,243 Expand EITC −1.2 −9.4% −0.2 −6.9% $8,384 $4,910 269,713 Expand CDCTC −1.2 −9.1% −0.3 −10.3% $5,141 $9,342 518,085 Expand Housing Voucher Program −3.0 −22.7% −0.9 −31.0% $34,916 −$5,923 −93,181 Expand SNAP Benefits by 35% −2.6 −20.2% −0.8 −27.6% $43,075 −$3,812 −164,392
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From page 179... ...
. CDCTC = Child and Dependent Care Tax Credit, EITC = Earned Income Tax Credit, SNAP = Supplemental Nutrition Assistance Program, TRIM3 = Urban Institute's Transfer Income Model, version 3 microsimulation model.
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From page 180... ...
Work-Based and Universal Supports −4.3 −33.7% −1.2 −41.3% $44,278 $10,185 563,000 Expand EITC −1.2 −9.8% −0.2 −7.1% $8,522 $4,910 269,713 Expand CDCTC −1.2 −9.3% −0.3 −7.1% $5,465 $9,070 502,982 Begin a $2,000 child allowance −3.0 −23.9% −1.1 −34.5% $32,553 −$1,088 −60,000 3. Means-Tested Supports and Work −6.3 −50.3% −1.5 −53.6% $90,771 $1,985 393,810 Expand EITC −1.2 −9.8% −0.2 −7.1% $8,522 $4,910 269,713 Expand CDCTC −1.2 −9.3% −0.2 −7.1% $5,465 $9,070 502,982 Expand Housing Voucher Program −2.8 −22.6% −0.8 −28.6% $34,706 −$5,904 −93,181 Expand SNAP benefits by 35% −2.5 −19.6% −0.8 −28.6% $42,969 −$3,760 −161,332
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From page 181... ...
CDCTC = Child and Dependent Care Tax Credit, EITC = Earned Income Tax Credit, SNAP = Supplemental Nutrition Assistance Program, TRIM3 = Urban Institute's Transfer Income Model, Version 3 microsimulation model. SOURCE: Analyses commissioned by the committee from TRIM3.
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From page 182... ...
Although this second package -- Work-Based and Universal Supports -- failed to reach the 50 percent poverty-reduction goals, its combination of substantial child poverty reduction, positive impacts on employment and earnings, and cost led the committee to judge it to be of sufficient policy interest to include in this report. A MEANS-TESTED SUPPORTS AND WORK POVERTY-REDUCTION PACKAGE Our third and fourth policy packages were formulated in ways that fully met the 50 percent poverty-reduction goals set by the committee's charge.
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From page 183... ...
A UNIVERSAL SUPPORTS AND WORK POVERTY-REDUCTION PACKAGE The fourth package we devised and evaluated combines work incentives, economic security, and social inclusion with some existing programs, plus two new programs introduced in Chapter 5: • EITC Policy #2: Increase payments by 40 percent across the entire schedule, keeping the current range of the phase-out region. • 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 age 5.
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From page 184... ...
This package provides a child allowance that is similar in value to what most taxpayers now receive for their children through child tax credits and tax exemptions, combined with three work-enhancing features: an expanded EITC and CDCTC and a higher federal minimum wage. To this we add one of the Child Support Assurance policies and an additional feature that promotes equity and social inclusion -- an extension of benefits to include immigrant children.
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From page 185... ...
An assured child support benefit, also paid on a monthly basis, would provide a somewhat larger measure of economic security to single-parent families legally entitled to private child support. With such an assured benefit set at $1,200 per year, coupled with the child allowance it would all but erase deep child poverty, while also reducing economic insecurity and unpredictability.
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From page 186... ...
"Means-tested support of the package" combines expansions of and Dependent Care Tax Credit with a child combines expansions and work EITC, minimum wage, the EITC, the Child and Dependent Care Tax Credit, SNAP, and housing vouchers. "Universal supports and work package" and the expansions of the EITC,child support assurance, restoration of immigrant program combines CDCTC with minimum wage, and the Child and Dependent Care Tax Credit with child support assureligibility, andlegal immigrant program eligibility, and a child allowance.
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From page 187... ...
"Means-tested support and workthe EITC, minimum wage, supports and work package" combines expansions of package" combines expansions of the EITC, the Child and Dependent Care Tax Credit, SNAP and housing vouchers. "Universal supports and work package" com and the CDCTC with child support assurance, restoration of immigrant program bines expansions of the EITC, minimum wage, and the Child and Dependent Care Tax Credit with child support assurance, restoration of legal immigrant program eligibility, and a child allowance.
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From page 188... ...
"Universal EITC, the Child and Dependent Care Tax Credit, SNAP and housing vouchers. "Universal supports and work package" combines expansions of the EITC, minimum wage, and the Child and Dependent Care of Credit EITC, support assurance, supports and work package" combines expansions Tax the with child minimum wage, restoration ofCDCTC with child support child allowance.
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From page 189... ...
The second package, which combines relatively low-cost work-based and universal supports components, would reduce child poverty and deep child poverty considerably but not enough to meet the 50 percent reduction goal. Figure 6-1 also shows projected poverty reduction in the absence of the employment-related behavioral responses elicited by the program packages.
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From page 190... ...
The second package adds a $2,000 child allowance to the EITC and CDCTC components of the work-based package, which adds about $35 billion to the cost and lifts an additional 1.6 million children out of poverty. The third and fourth packages bring an additional 1.5 million children out of poverty, but at a marginal cost of about $45 to $67 billion per year.2 More details on the estimated impacts on poverty of the four packages are provided in Tables 6-2 (based on the 2015 tax law)
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From page 191... ...
. The work package is not as effective at reducing deep poverty as it is at reducing 100 percent SPM poverty, while the second package, combining the child allowance with work supports, is relatively more effective.
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From page 192... ...
0 0.0 0.5 1.0 1.5 Children Lifted Above 50% TRIM3 SPM (millions) FIGURE 6-5 Simulated program cost, based on the 2015 tax law, by number of children lifted out of deep poverty (<50% SPM poverty)
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From page 193... ...
CONCLUSION 6-2: The committee was unable to formulate an e vidence-based employment-oriented package that would come close to meeting its mandate of reducing child poverty by 50 percent. The best employment-oriented package it could design combines expansions of the Earned Income Tax Credit, the Child and Dependent Care Tax
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From page 194... ...
CONCLUSION 6-3: The committee combined two work-based and one income-support policy expansions in a package that was projected to reduce child poverty by one-third and deep child poverty by 40 percent, at an estimated annual cost of $44 billion. This package was estimated to increase employment by 550,000 jobs and earned income by nearly $10 billion.
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