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The latest stimulus plan’s expanded child tax credit could be the first step toward guaranteed income in America

March 9, 2021, 10:00 PM UTC

Along with extended unemployment and much-debated stimulus checks, the latest COVID relief package includes a subtly radical measure: a child tax credit, which would give families up to $300 a month per child for the next year.

The proposal is an expanded version of an existing policy: Currently, the child tax credit provides families with a $2,000 credit per child, allowing them to collect up to $1,400 once a year, when they do their taxes. The new iteration of the child tax credit, however, increases the credit to $3,000 per child ($3,600 for children under 6) and allows parents to receive half the credit in advance of their 2021 annual tax return. The plan calls for the IRS to send out periodical payments from July to December, but it’s unclear exactly how often; many guess it will be monthly.

For the expanded benefits, the full amount would be available to those with incomes up to $75,000 on single returns, $112,500 on head-of-household returns, and $150,000 on joint returns. The income level is based on the adjusted gross income (AGI), which can be found on your tax statements. Partial benefits would be available to those with incomes up to $95,000 for individuals and $170,000 for joint filers, when the program phases out completely. Those who do not qualify for the expanded credit can still take the regular credit of $2,000 per child as long as their AGI is below $400,000 on joint returns and $200,000 on other returns.

In this form, the child tax credit amounts to a form of guaranteed income, a policy that has largely existed on the fringes of mainstream politics until the pandemic. (And until Andrew Yang.) 

“Monthly delivery is [an] especially critical aspect of the proposal, because ongoing expenses for raising kids—such as diapers, clothes, a car seat—don’t wait till tax time,” said Rebecca Vallas, a senior fellow at the Center for American Progress.

Now that the tax credits have garnered more widespread discussion and popular support—recent polling from the progressive think tank Data for Progress shows some 59% of likely voters support child tax credits—longtime advocates for the policy are hoping to seize their moment and make a guaranteed income for families a permanent fixture of American life.

“Those of us who’ve been doing this work for a long time have always said that it’s going to take systemic policy to ensure that the initiatives we’re offering are taken to scale,” said Aisha Nyandoro, the CEO of Springboard to Opportunities, a nonprofit organization that runs guaranteed-income pilot programs. “In that regard it’s very exciting to be having national conversations about this. But it’s also very sad because it’s taken a pandemic for us to get to a place where we recognize that individuals are poor because of the systems we put in place.” 

Nyandoro has seen firsthand how giving families free cash payments without restrictions—this part is crucial—has transformed people’s lives and relationships. One of Springboard to Opportunity’s programs is the Magnolia Mother’s Trust, which gives a small group of low-income mothers in Mississippi $1,000 per month, no strings attached. In the three years since the program first launched, Nyandoro has heard from mothers who say the payments have helped them get out of debt and go back to school, allowed them to cook healthy meals for their family more frequently, given them room to say “yes” more often to their children, and relieved the immense stress that comes with economic hardship. Most of all, they say the monthly checks have made them feel for the first time that they’re good mothers. 

On a national scale, the effects of monthly payments via the child tax credit will be even more profound, advocates say. 

“The child allowance included in this bill is nothing short of revolutionary—we’re on the verge of cutting child poverty in America in half,” said Natalie Foster, the cochair of the Economic Security Project, a guaranteed-income advocacy group. “The monthly cash payments are effectively a guaranteed income for families with kids, and will have as much of an impact on people’s wallets as their well-being.” (Guaranteed-income recipients in Stockton, Calif., where another pilot program is underway, were “happier, healthier, and less anxious” than those who did not receive monthly payments, according to The Atlantic.)

The guaranteed-income proposal at the heart of the expanded child tax credit has earned some bipartisan support in Congress, most notably among Sen. Mitt Romney, who has drawn up his own legislation to provide families with monthly payments. Though Romney’s plan would do away with the Child and Dependent Care Tax Credit, it would be a worthwhile tradeoff “for just about all U.S. families,” Eric Levitz argued in a recent New York magazine story. Some Democrats, meanwhile, are ready to make the tax credit expansion permanent.

Advocates for guaranteed income for families say these are promising signs. But even among Democrats’ ranks, there are more conservative members who have already stymied some of the party’s attempts to enact more progressive changes, such as raising the federal minimum wage, even when they are popular. And many Republicans remain staunchly against the expanded credits. In February, senators Marco Rubio and Mike Lee released a joint statement expressing their opposition to the policy, which they decried as “welfare assistance.” 

“An essential part of being pro-family is being pro-work,” the statement read. “Congress should expand the Child Tax Credit without undercutting the responsibility of parents to work to provide for their families.”

Advocates note the difficult ideological work that lies ahead. Any hope of extending guaranteed-income initiatives beyond the scope of the pandemic requires getting Americans to undo deep-seated assumptions many harbor about poverty, Nyandoro said. 

“We have so wedded moralism to poverty that it’s going to take time to divorce ourselves from the notion that poverty isn’t a moral failing—that morality tale is a lie,” she said. “That’s going to take a long time. But for now, we have the numbers to get the legislation passed, so let’s do it.”

“And the beautiful part is,” Nyandoro continued, “that once it gets done and data begins to come out about how this legislation has changed lives, we’ll be better able to pull the other supporters we need along with us.”