Monday, April 24, 2017

Student suggests that a Federal Child Allowance could replace the Child Tax Credit

Dear Thomas E. Price, M.D.,

My name is [Student’s Name]. I am writing because I know that you are the head of the U.S. Department of Health & Human Services, and I would like to advocate for a new child tax credit policy and possibly re-introduce a new policy to help the country’s suffering children. Experts who specialize in poverty and child well-being have suggested Federal child allowances and Federal Child Development Accounts, and I think that such policies could cause a large impact on every child in the United States while helping their caregivers as well. 

As of now, our country has the highest child poverty rates among advanced nations. In 2015, 13.1% of American children were food insecure and 19.7% of Americans under the age of 18 were in poverty (“Hunger and Poverty”, n.d.).  Such statistics are evidence that our nation is failing to do everything it can to prevent horrific levels of deprivation among children. However I know that we allocate enormous amounts of money, spending it on child hunger and child anti-poverty programs annually (for example, $23 billion on child nutrition programs, $19.6 billion on child tax credit refunds where credit exceeds liability for tax, a high percentage of the $71 billion we spend on Supplemental Nutritional Assistance Program benefits, etc.), but this money is not spent well. The money that goes toward child poverty hardly affects the children who are the very worst off; instead, kids who are higher up on the ladder are getting extra assistance.  The children in the poorest families, where parents cannot get TANF, and may have difficulty getting SNAP, perhaps because they are homeless, as depicted in the recent book $2 A Day, are abandoned and harmed by our present welfare system.

I have been researching, reviewing, and learning about one of the current programs that is to help the kids who are not well off: the child tax credit. I have found that the child tax credit has a hard time reaching the severely poor families. The majority of families who receive this assistance are those who have a moderate and middle income. You would think that the people who have low to zero income would be the ones who would find the most use of this money for the children. Granted, the middle and moderate families need the help too. In fact, almost all of America could use an extra boost to ensure their kids are getting some type of aid. These tax credits help the poor by providing credit up to $1,000 per child who is under the age of 17. One of the first flaws that strikes me is that this child tax credit helps the working family. Does that mean that the people who are out of work or are unable to work do not qualify for this tax credit? Are we excluding the children whose parents are not employed from this financial boost? Also, the fact that a child is no longer eligible once he or she turns 17 can cause a burden as well. I believe that the age should be raised. The child tax credit is also confusing to file for, making it a burden for families who are unfamiliar with the process. There are many additional options that can add onto the original credit, such as the Earned Income Tax Credit or the Additional Child Tax Credit. Lastly, one may be overwhelmed while trying to decide whether or not their child will qualify for the support. The child tax credit is providing some help, but it is seldom working. It does not help everyone—so why not try something new?

I think that the government should provide a monthly check to every child in the country regardless of income or socioeconomic status. The government would get rid of some of the child tax credits completely and instead write a check every month to families with children. Having these allowances will ensure that every single child have an equal starting base. The parents will have cash to provide food, clothing, shelter, school supplies, and other basic needs. The vulnerable will have a floor that will be hard to fall under. They know that money will be provided to help care for their family. The parent will need to claim the number of children they have and a check will be provided to each. It’s a simple process unlike the child tax credit. Obviously children age 17 and under will be able to obtain the check, but I think that the transition years of 18 through 20 should still be given a check unless the child themselves identifies as independent. The reason I think this would be an adequate addition is because at this is a confusing age for many young adults. It is this time that they are trying to go to college, which is expensive! Many students will go to a university close to home so that they can reside at home for a few more years to save a few thousand dollars. This is another two years that they are relying on their guardians to provide meals and a place to sleep. This is another two years that families could use the assistance. By the age of twenty someone tends to start to get a grip on their life and can begin to help with their own finances. This policy will treat everyone equally. No one person will receive more or less money based on income. It will be an easy process of apply and receive. Kids will have a solid base. The positives out weigh the negatives.

One of the biggest concerns will be how expensive this policy will be. I was thinking that each child’s check would be roughly $250 per month, equally about $190 billion a year (Porter, 2016). Yes, at first glance that seems like an outrageous amount, but hear me out. Simply by cutting the child tax credit, the country could pay for half of that already. Also, by giving out these allowances an enormous amount of people could be lifted out of poverty. People will be able to buy more, which will help the economy. According to John Maynard Keynes, the best way to help an economy was to spend more! With less people in poverty, more people will be able to contribute to spending, which will affect the supply and demand of products and boost our economy. Another hesitation is that citizens that don’t actually need the help will still receive a check. In reality, we could all use the help, but the point of the universal access is that everyone is treated equal. There will be zero uproar about someone having access to more money than someone else. It will be a set amount that each and every child will receive.

I hope that this letter has made you think about the current policy and has opened your eyes to a new possibility. The child tax credit does help some children who are in poverty, but there are still many glitches with the idea. I think that having a stagnant cash amount given to each child will provide a steady base for all. Thank you for your time. 

[Student’s Name]

This is a good example of a student’s letter to a person in the government in which a student analyzes a policy proposal and makes a recommendation, or writes a letter of advocacy.  

In response to the student’s paper, I had a few suggestions to make concerning the proposed policy.  
  1. As most children are poor at young ages (poverty rates for children aged 0-11 are far higher than poverty rates of children aged 12-18), the allowance for younger children could reflect this by being larger than the allowance for older children.
  2. You could compare this to the guaranteed minimum income.  I know that my idea that every citizen ought to have a guaranteed minimum income is controversial and radical, because most Americans think it is fair to force people into the capitalist labor market by denying benefits to able-bodied working-aged adults who do not or will not take employment.  But, no one expects children to work, and most of us expect that elderly persons should be allowed to retire and rest in their final years.  So, why not provide a guaranteed minimum income for children and the elderly, since we have no objections to their being out of the labor force?  
  3. A Federal Child Allowance program can be used as a reward for children who remain in school and avoid problems with the law.  Children who have high rates of being absent without excuses from school or who do not attend school could have their allowances cut or eliminated, and young persons who are convicted of crimes or status offenses could also lose some of their allowance benefits. Students who meet particular academic milestones might get a little bonus with their benefits. 
  4. It probably would make most sense to split the child allowance into two accounts; one would be a child development account, and the money in that account could be used to make a down-payment on a home, pay for education-related expenses, pay for health care, or pay for investment in a business. The other income stream would be a “living allowance” for families (very much like a refundable child tax credit), used for child care, food, clothing, housing, school supplies, transportation, and entertainment.  

I would give every child age 0-11 a living allowance (refundable child rearing tax credit) of $4800 per year ($400 per month), and $200 per month ($2,400 per year) for young persons aged 12-19 (provided they were still in school or vocational training programs).  I would give every child a “Child Development Account” of $5,000 at birth, and add $2,100 to that each year ($175 per month or $2,100 on each birthday) up to age 20 (provided the young person was in school and not found guilty of any crime or status offense).  That could be a lifetime benefit of $47,000 for each person born in the USA, and would pay a significant portion of college expenses and also pay for a downpayment on a home or condominium. 
Assuming no one ever lost benefits for dropping out of school, or had benefits reduced for crimes or school absenteeism, and everyone continued getting benefits to the maximum age because of remaining in school or getting vocational training, the total cost per year would be $512 billion. (I have used Census estimates for the American population by age and multiplied by the benefits I've suggested).  But, there could be reductions (considerable reductions) for SNAP, NSLP, Medicaid, Student Loans, and the existing tax expenditures for the child tax credit (which would be eliminated).  I estimate a $16 billion reduction in SNAP spending, a $8 billion reduction in NSLP, a $30 billion reduction in Federal Medicaid, a $4 billion reduction in student grants and loans (and corresponding tax credits associated with loans), and a $5 billion reduction in the child credit tax expenditure (eliminated) and various other tax credits associated with child care.  So, perhaps $60 billion in reductions to existing programs would leave the net cost of this policy at $452 billion.  I would pay for it by transferring $178 billion from the Defense Department budget (cut that budget by about 30%), eliminating the deduction for home mortgage interest (saving $83 billion), and raising $191 billion by increasing income taxes on households earning $50K to 100K by about 2 percentage points (actual income taxes paid would go from 14-15% to 16-17%), increasing income taxes on households earning $100K to $200K by 2.5 percentage points (actual income taxes paid would go from 17.5% to 20%), raising income taxes on households earning $200K to $500K by 3 percentage points (actual income taxes paid would go from 24% to 27%), raising income taxes on households earning $500K to $1 million by 43 percentage points (actual income taxes paid would go from 29% to 33%), and raising income taxes on households earning over $1 million by five percentage points (actual income taxes would go from about 33% to 38%).  I have used the IRS report on tax returns from 2014 (filed in 2015) showing actual incomes earned and taxes paid to calculate these tax rates and the revenue we could expect by these tax increases.

I think we can defend our nation adequately spending $425 billion a year instead of over $600 billion per year on the Defense Department, and I think wealthy people can afford to pay 38% instead of 33% of their income in taxes. The benefits we would gain by having so many children lifted out of poverty with these $4,800 per year spending allowances given to every family would be unimaginably tremendous.  The child development accounts would also have a terrific impact on our society.  Imagine the increase in home ownership, and the decrease in college debt this policy would give us.  Imagine the decrease in crime that would follow from young people having all this money saved up and the decrease in poverty.  

Since I’m worried about overpopulation, I think parents would only get the child allowances for their first three children, and then fourth children and subsequent children would get no further benefits, but there would be no limit on adopted children (and I’m not proposing elimination of the Child Adoption Tax Credit, either).  

Immigrant children would get the benefits after naturalization, but there would be no retroactive bonus of benefits for the child development accounts (you can’t immigrate here when you are five, and then get the $5,000 initial deposit you would have received if you had been born here).  There would also be regulations with the benefits so that they would be paid to parents who were citizens, so if you are visiting here from abroad (you aren’t an American citizen) and your child is born here (your child is a citizen), and then you return abroad with your child, your child would not get the living allowances or additional contributions to the development account while living with you abroad, but they would still get the initial “American citizen born in the USA” benefit of $5,000 in the development account, and allowance benefits for every month they lived here with their parents, and annual development account benefits for every year in which they lived more than half the year in the USA.  The development account benefits could only be spent in the USA (business investment, housing purchase, health care expenses, and educational expenses in the USA are legitimate uses of the development account, but not expenses abroad, aside from study-abroad semesters or foreign language study abroad when permanent residence is in the USA).  

Works Cited
Hunger and Poverty Facts and Statistics. (n.d.). Retrieved February 27, 2017, from

Porter, E. (2016, Oct 18). Giving Every Child a Monthly Check for an Even Start. Retrieved Feb 26, 2017, from 

No comments: