Biden’s Child Tax Credit as Universal Basic Income

For several decades, child advocates have tried to bring more public indignation to the scandal of extreme child poverty, and have pushed for the expansion of the Child Tax Credit. In recent years, some progressives have called for something that seemed even more utopian, a universal basic income.

Well, gentle reader, we just got both. And the brilliance is in the details.

The credit, which is really a family allowance run through the IRS, provides $3,000 a year for each child under 18, topped up to $3,600 for kids under six. So a family with three kids gets almost $10,000. As a point of reference, the average income of the bottom 20 percent of American households is about $14,000.

The new Child Tax Credit will cut the rate of child poverty in half, and will raise the total incomes of the bottom fifth of American families by 33 percent. I never expected to see something like this in my lifetime. (...)

If you compare the new tax credit with the Earned Income Tax Credit and the existing Child Tax Credit, there is one key difference beyond the expanded benefits. The existing tax credits leave out the poorest of the poor, because you have to have some taxable income in order to get them.

The new credit is for everyone, except the very richest. If you have some existing contact with the IRS, checks will come automatically. If you don’t, all you need to do in order to apply is to state your income, the Social Security numbers of you and your kids, and that’s it.

There is no hassle establishing income eligibility, because eligibility is automatic. There will be no abusive audits of the kind that the IRS has imposed on so many EITC recipients for technical mistakes.

Even better, the legislation authorizes the Treasury to send checks monthly. Under the current system, EITC and CTC recipients get their refunds at tax time.

People in poverty often borrow against their anticipated annual tax refund, paying usurious interest rates to tax preparation companies, for whom these refund loans are a major profit center. When the check comes, it’s experienced as coming from H&R Block rather than from Uncle Sam.

This new policy eliminates the middleman. The recipient gets either a check, a direct deposit, or a debit card from the Treasury, and gets 100 cents on the dollar with no rake-off by the tax preparer.

by Robert Kuttner, American Prospect |  Read more:

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[ed. See also: The Moment When Democrats Recovered Their Soul; and, McConnell: From Moscow Mitch to Beijing’s Bozo (American Prospect).]