October 19, 2016
Today’s New York Times has an interesting article about child poverty (“Bold Strike Against Poverty: A Check for Every Child”) by Eduardo Porter. Accompanying the article is this disturbing chart:
The current federal income tax deduction that allows families to exclude $4000 per child from taxable income “avoids the poor almost entirely,” Porter writes. “Just over 1 percent of the $40 billion it costs the federal budget every year flows to the poorest fifth of the population.” That comes to about $10 on average for a poor family — not much help.
Porter is calling attention to a forthcoming paper from the Russell Sage Foundation (unfortunately not yet available) that will propose sending every family a monthly check for $250 for every child under 18. That’s the approach of many other OECD countries. The monthly check would replace the per child deduction and child tax credit in the current tax system.
Providing assistance to children through the tax code (“tax expenditures”) turns out not to help poor children very much at all.