As you know, DC residents and workers are fighting locally for a guaranteed income. There’s action being taken on the federal level as well. In addition to efforts to make the 2021 expanded Child Tax Credit permanent, a new bill would create a universal child benefit – a guaranteed income for all the nation’s children.
In April, Representative Rashida Tlaib re-introduced the End Child Poverty Act (ECPA) after the original version of the bill died in committee in 2022. The bill, if passed, would create a new universal child benefit that would provide, in 2023, $393 a month to every child under the age 19. Annually, the allowance would provide the difference between the previous year’s federal poverty level for a single person and a two-person family ($4720 in 2022). Meanwhile, the bill would eliminate both the federal Earned Income Tax Credit and the Child Tax Credit while simultaneously creating a refundable $600 credit for single filers and a $1200 credit for joint filers. These credits would phase out gradually starting at $20,000 and $40,000, respectively. It would also create a $600 refundable credit for adult dependents.
An analysis of the act by Policy Engine and People’s Policy Project found that, nationally, the act as introduced would reduce overall poverty by over 25% and cut deep poverty (defined as 50% or below of the federal poverty threshold) by 32%, at a cost of $270.3 billion. Black and hispanic households would see the greatest reduction in poverty from the ECPA, as Black households in poverty would fall by 30.3% and hispanic poverty by 32.6%.
The heart of the bill, of course, is targeted at child poverty, and this is reflected in the projected impact. According to the Policy Engine analysis, across the country, this bill would reduce child poverty by over 60%, and would practically end deep child poverty. This would be a greater reduction in child poverty than even the 2021 expanded Child Tax Credit (CTC), which, nationally, cut child poverty by just under 50%.
How would the ECPA impact the District, more specifically? According to a PolicyEngine analysis, in Washington, the ECPA would cut childhood poverty by 52%, from 14.6% to 7.0%. It would cut deep poverty among the district’s children by 86.5% to .3%. Those in the lowest two income deciles in DC would, predictably, see the greatest gains in income. Both would see their net income rise by more than 5%. Black and Hispanic residents would see the greatest positive impact.
The ECPA and expanded CTC take two different approaches to reach a similar outcome – a drastic reduction in child poverty. Instead of delivering aid through the tax system, the ECPA eliminates existing sources of aid in the tax-code and creates an entirely new benefit, akin to Social Security (in fact, the program would be administered by a new office within the Social Security Administration). This has several benefits. By abandoning the CTC and EITC, the bill cuts the net cost of the program by about a third, without cutting net governmental benefits to anyone. It also means that nonfilers would not need to file taxes to receive the benefit. Finally, it simplifies significant parts of the tax code. Given the complexity of our tax system and the under-utilization of credits that contributes to, especially amongst nonfilers, this is a laudable goal.
On the other hand, eliminating two popular tax credits and creating a massive new government benefit program is, to put it lightly, going to be a hard sell. The bill, when reintroduced this year had only two cosponsors – Rep. Ilhan Omar and Rep. Jesus “Chuy” Garcia. By contrast, a bill to make the expanded Child Tax Credit permanent was introduced two months after the ECPA with 209 cosponsors. Moreover, since 2021, eleven states have enacted or expanded their own refundable child tax credits, showing the momentum that the federal expanded CTC created around using the tax code to address child poverty. Practically speaking, it may make more sense, at least in the short term, for advocates to focus their energy on expanding child tax credits at the state and federal levels.
In the District of Columbia, Councilmember Zachary Parker has taken a strong first step by introducing a bill to create a District Child Tax Credit. The bill would create a $500 refundable tax credit per child (for up to three children) for low- and middle-income households. Though the value of the credit is relatively small, multiple analyses have suggested that it would help to reduce child poverty in the District by roughly 5.2%. And it would give the District something to build on in future years.
When the City Council returns to session in September, we will be focusing on passing the District Child Tax Credit bill. The first step will be to get Councilmember McDuffie to schedule a public hearing on the bill in the Committee on Business and Economic Development. Join us in advocating for this important legislation by signing on to our letter to CM McDuffie and the full City Council here: DC GIC SIGN ON/Endorsement Letter.
