Learn About the New Child Tax Credit Expansion and How It Will Help American Families

The Center on Poverty and Social Policy helped to ensure that the poorest children in the U.S. receive the full benefits of the Child Tax Credit.

Caroline Harting
July 15, 2021

Taking Action is a Columbia News series that seeks to showcase efforts from around the university that rely on academic knowledge to tackle real-world challenges in a purposeful way. 

The recent expansion of the Child Tax Credit marks a sea change in how our country views its responsibilities towards family and children. The United States hasn’t created this significant of a program to alleviate poverty since the creation of Medicare and Medicaid in 1965.

Since its founding in 2014, Columbia’s Center on Poverty and Social Policy (CPSP) has been producing consequential research on the impact that a universal child allowance would have on families and the United States economy. Their reports have driven the conversation on how the U.S. should care for its poorest families. According to the Center, the expansion of the Child Tax Credit has the potential to slash poverty rates.

Columbia News caught up with Irwin Garfinkel, the co-director of CPSP, and Megan Curran, the director of policy for CPSP, to learn how the center has influenced this recent expansion of benefits, why the United States has made this change now, and how the expansion will help the neediest families in America thrive.

Q: The Center on Poverty and Social Policy examines the issue of child poverty through data-driven research. When did you start doing this research? What led you both to tackle child poverty in the United States? 

Irwin Garfinkel, Center on Poverty and Social Policy

Garfinkel: The Center started doing research on child allowances and child poverty from its inception in 2014. Personally, the very first paper I published was in 1968 and it was on negative income taxes and child allowances. Then I went on to get a PhD in economics and social work at the University of Michigan. 

Later, in 1970, I went to work with the Institute for Research on Poverty at the University of Wisconsin. And in 1975, I became the director of the Institute. I've been at this a long, long time. 

Megan Curran, Center on Poverty and Social Policy

Curran: I came to this center in a slightly different way than Irv in that I’ve been looking at poverty from the direct services perspective. In college, I was working with a neighborhood drop-in center in the Bronx. We linked families up with housing assistance or food assistance. Childcare was a huge issue there.

If we think of poverty at its most basic core as not being able to meet your basic needs, the question that just kept coming back to me was that it shouldn't have to be this hard. Why are we making it so hard for families and especially families with kids to simply live their lives? This notion formed the type of research that I do that tries to impact policy change. 

Q: What was the major issue with the Child Tax Credit in the United States before the expansion? 

Garfinkel: The issue was that the poorest third of children in the U.S. got a smaller tax credit than everyone else, and the poorest 10 percent of American children got nothing. That’s perverse. We pointed out the numbers that if you correct that disparity what that would do to reduce child poverty was powerful. 

Q: How has your research helped with expansion of the Child Tax Credit?

Garfinkel: We did two major papers. In 2016, we did a Century Foundation report where Christopher Wimer and I worked with Sophie Collyer, David Harris, and Jane Waldfogel from the center. Then we worked with the Russell Sage Foundation on their special issue about policies to reduce poverty. We merged with another group, which included Luke Shaefer, Greg Duncan, Kathryn Edin, Timothy Smeeding, and Hirokazu Yoshikawa to write a paper on child allowance.

Those two papers set the stage for the National Academy of Science child poverty study. The child allowance became the central proposal. We found that from running our numbers that the biggest reduction in child poverty came from the child allowance. Those numbers definitely drove the debate. 

Q: What does the most recent expansion of the Child Tax Credit do?

Curran: The current expansion does three important things. It increases the benefit levels to make it a meaningful credit. A family could be eligible for about $3,000 a year if their child is between the ages of six to 17. It’s higher at $3,600 a year for families with children under six. 

The second big change is that it makes the full benefit now completely available to those with the lowest income. As Irv mentioned, our research showed how about 1/3 of all children had been excluded from this full benefit because their parents didn't earn enough, so this is a big deal.

The third major change is that it pays the benefits out on a regular monthly basis beginning now, rather than annually. This is a game changer in terms of how we support families; not only through the tax and benefits system in the U.S., but also in terms of what families can do with this money. They can start to count on it as a more regular part of their household budget because as you know, the rent comes every month, not once a year. This is the good news.

The bad news is that the expansion is currently only in place for a very short amount of time, one year. The monthly payment part is set up for about six months at the moment. The rest will be distributed in a lump sum again next year. Many people are pushing for this to be a longer policy change.

Q: What results do you anticipate from the expansion?

Garfinkel: In the last decade, we've had an incredible amount of high quality research, mostly based on the Food Stamps program and the Earned Income Tax Credit. It shows that following those programs there were reductions in low-birth weight and neonatal mortality and increases in health and well-being of the children that continues into adulthood. They live longer. They're healthier. They get more education. They earn more income and pay more taxes. We can infer that the Child Tax Credit expansion will have similar benefits.

Most recently, the research that I've done is a benefit cost analysis of the child allowance. I’ve found that the child allowance will cost about 100 billion dollars annually, but will generate benefits over 800 billion dollars per year. This expansion is going to a big change for the poorest, but will benefit all the rest of us.

Curran: Congress is always going to consider how much something costs. Making these payments does cost money, but as Irv was just saying, it essentially has a rate of return of eight times. We also found, at the center, that the new Child Tax Credit — combined with other key elements within the American Rescue Plan passed earlier this year — has the potential to cut child poverty in half in 2021, if all children and families receive what they are now newly eligible for.

 Q: What is the difference between the Child Tax Credit and a child allowance?

Garfinkel: What we previously had was the Child Tax Credit. The reforms that Megan just described convert the Child Tax Credit into a child allowance by making it universal, making it the same benefit that everybody gets, and making payments monthly. 

Curran: A child allowance is the umbrella term for programs that countries use to make regular payments to families based on the presence and number of children in the home. It recognizes that there are costs associated with raising children, but it's also a societal good that families are raising children. The U.S. has long been an outlier globally on this issue because we didn't have one of these programs. Many other countries created these types of programs post-World War II. 

Q: Why has it taken so long to enact in the United States? Why is it happening now?

Garfinkel: The first thing I would point out is the U.S. has always been a laggard in the provision of cash assistance. Before we became independent from England, we had “poor laws” where local governments took care of their poor, but we would often not provide for people who were deemed “able-bodied.” We were even stingier than England. In fact, England was for one period of time, very generous. 

However, this is a magic moment now. We have slowly been moving in the right direction. There has been a push for the child allowance within the Democratic Party, and now that Congress and the White House are Democrats, we’ve seen this new movement.

Curran: It's definitely a combination of events and of shifting political dynamics. Without the pandemic, frankly, I don’t think we would be in this place. It finally gave us a real push to reevaluate how we usually approach things. In the past, what we have tended to do is not just target by how much income you have, but then put conditions on access. You'd have to be below a certain income to be eligible but then you have to also be working a certain number of hours a week to get it. You’d have to be within a small window — not too much money but not too little. It becomes a maze to figure out whether or not you're eligible. What ends up happening: too many children are left out.

The pandemic has shown us that it doesn't make sense to condition access to food assistance or medical care or housing on whether or not you have a job or how much money you have because those things can change on a whim. This crisis exposed the barriers that we were placing on families.

Garfinkel: Megan is right about the pandemic. The murder of George Floyd and the Black Lives Matter movement also played a critical role in re-awakening the moral conscience of the nation. 

Q: The center is based in the School of Social Work, and most of you at the center have social work backgrounds. However, some others have backgrounds in economics, public health, and data science. How does this multi-disciplinary collaboration impact your research? Why is it important?

Garfinkel: The different disciplines have different foci and different theoretical and conceptual frameworks and bumping up against those is productive. If you just talk to someone within your discipline, you're likely to miss things. Psychologists have something to teach everyone, sociologist have something to teach everyone, economists have something to teach everyone. You get them all together, and you learn.

Curran: Everything that I've done starting from my undergraduate degree, it's all interdisciplinary. I think it's always of value to look at a particular issue from multiple perspectives. We have that diversity of thought in the center itself, and then being situated within the School of Social Work and Columbia University. That perspective gives us tools to inform better policy.

Q: Any final thoughts?

Curran: Please tell your family and friends all about the new Child Tax Credit expansion and make sure that the kids in your lives are signed up. Go to https://www.whitehouse.gov/child-tax-credit/ for answers to all your questions. The payments are going to go out soon, but even if you're not signed up yet, you can still get them. Tell any family with children in your life to take a look.

Garfinkel:  Even one year of benefits will do enormous good. But making the child allowance permanent will be an incredible achievement, cutting child poverty by nearly half and generating benefits over eight times the cost.