When the child tax credit, first enacted in 1997, was expanded for a year in 2021, it was a major political and social victory for the country. When the pandemic exacerbated the financial woes of many families, the Biden administration’s decision not only increased the amount of tax credits, but also changed payments from year-end lump sums to monthly payments. I also waived my parents’ work requirements. This immediately affected a third of all children in the United States, including 52% of black children and 41% of Hispanic children. These families were previously excluded because their parents earned too little to qualify for the tax credit. Expanded tax credits have lifted 3.7 million children out of poverty by December 2021 and significantly reduced parental labor participation.
Then, in January 2022, the expanded tax credits expired, sending 3.7 million people back into poverty, with higher poverty rates among Hispanic and Black children. Credit shows that cash assistance helps families survive and, contrary to some political beliefs, parents don’t leave the work system because of it. Failure to update should not negate this important political milestone. Congress got him within one vote to waive the parental job requirement as a condition of obtaining cash assistance for the family.
Expanding the child tax credit is a step towards a universal basic income that could end poverty without increasing unemployment. Her 37.9 million people live in poverty in the United States, according to 2021 Census Bureau figures. By providing every individual with a government-funded monthly payment, we lift them out of poverty while giving millions of children the opportunity to get a good education, improve their health and increase their future income. With 11.6% of the population living below the poverty line in the United States, this payment will benefit millions and save hundreds of billions of dollars by reducing the social cost of poverty. To do. The problem becomes this: How can we convince elected officials that poverty is not a moral failure, but a social condition that can be addressed by establishing an income floor below which no one falls? Is not it?
A Universal Basic Income (UBI) is defined by the Basic Income Earth Network as “a periodic cash payment made unconditionally to all on an individual basis without a means test or labor requirement.” The child tax credit is not exactly the same as it only covers families with children. It’s also been phased out at higher income levels, essentially still forcing people to prove they’re “poor enough” to need help – a means test. Rashida Tlaib A more ambitious bill that approaches the idea of a UBI, introduced by Rep. Mondaire Jones and Rep. Mondaire Jones, would do away with the means test, thereby creating a universal child benefit. Universal benefits have several advantages over means-tested benefits. They avoid divisions between “us” and “them” and remove the stigma associated with targeted interests. Once the stigma and bureaucratic hurdles are removed, persistent problems with acceptance and targeted transfers by the needy will improve. Universal benefits tend to be more popular, so they are politically safer and better funded. And universal benefits that omit means testing are easier to administer. The Universal Child Benefit registers all children at birth so no child is left out.
No country has yet introduced enough Universal Basic Income to meet essential needs. However, in the United States, Alaska has enacted a Permanent Fund dividend. This is an average annual cash payment of about $1,600 paid to all residents with no means test or working conditions. It contributes to poverty reduction and does not negatively affect people’s willingness to work.
In the United States, universal child benefits and social security for the elderly mean almost universal and unconditional income guarantees for the two most vulnerable age groups in the population. But of course, providing a basic income to the remaining adults faces serious hurdles. First, no one expects her child under the age of 18 to work. By one estimate, Social Security outweighs the financial cost of universal child benefits by a factor of eight. Empirical evidence from analyzes of a means-tested minimum income experiment conducted in the United States in the 1970s and a recent similar experiment in Manitoba suggests that It supports the idea that very few people quit their jobs. Such studies also show that people who stop working for wages do so for good reasons, such as finishing high school or caring for young children, and they do so at the minimum income level. If it is guaranteed, people who otherwise could not work will be able to work. It may exceed.
The norm that all able-bodied people receiving cash benefits should seek work can also be challenged. First, getting a job is not the only job. Taking care of children and the elderly is a job, mostly done by women for free. A basic income is a way to support and recognize that work without intrusive state oversight or enforcing the gender division of labor.
Second, research by Belgian political theorists Philippe Van Parijs and Yannick Vanderborght reveals that a significant portion of an individual’s income, or lack thereof, is due to luck rather than work. This is evident in the case of income from inherited property, but also in income associated with work in capital-intensive industries and with inherited knowledge and skills. On the downside, many people with unrecognized disabilities are trapped in the gaps of targeted cash transfer systems. A basic income is one way to equalize such morally arbitrary luck. not. A fair give and take is based on a fairer starting point.
Besides the belief that people would quit their jobs under a basic income, the idea faces another hurdle: the obvious cost. A $1,000 monthly basic income for everyone in the United States would cost about $4 trillion a year in total costs. A means-tested minimum income guarantee could be phased out once earnings exceed a threshold, raising income by the same amount at perhaps one-sixth the total cost of a basic income. But the net cost to the taxpayer is no greater with a basic income than with a means-tested minimum income. Because the higher taxes some people pay are offset by the basic income they receive.
As long as the mere fact of ‘mass production’ (money goes to everyone, only to be reclaimed by some in taxes) is an obstacle to political support, means-tested, guaranteed income is more politically viable. It may be a viable policy, but it loses some of the benefits of universal programs.
In the meantime, if a truly universal child benefit is finally adopted, it could tip the scales in favor of a basic income in the future.
This is an opinion and analysis article and the views expressed by the author or authors are not necessarily Scientific American.
