A Step in the Right Direction: The Expanded Child Tax Credit Would Move the United States’ High Child Poverty Rate Closer to Peer Nations — Columbia University Center on Poverty and Social Policy (2024)

Oct 25

With the passage of the American Rescue Plan in March 2021, the United States created a quasi-universal child allowance for the first time in the form of a fully refundable, advanceable monthly Child Tax Credit. The Child Tax Credit expansion also contributed to a historically low rate of child poverty in the United States for 2021: 5.2% when measured using the Supplemental Poverty Measure. The champions of the policy, including U.S. President Biden and congressional leaders, have called for making the Child Tax Credit expansion permanent and have cited reducing child poverty as central to the purpose. While that focus on child poverty reduction has been primarily in the domestic context, leaders have occasionally noted that the United States is a laggard internationally when it comes to policies that reduce child poverty, and relative to its peer nations, the United States has a much higher rate of child poverty. Making the ARP Child Tax Credit expansion permanent would impact where the United States stands internationally in terms of child poverty rates. In this report, we seek to provide an estimate to how far the United States would move in its child poverty ranking relative to other wealthy nations with such a policy change.

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Key Findings

When ranking child income poverty rates across 34 OECD nations from lowest to highest, the United States, with one of the highest rates of child poverty, ranks 31st .

The American Rescue Plan of March 2021 expanded eligibility for the Child Tax Credit and the value of the credit. Such an expansion, if continued, could also bring the child poverty rate in the United States significantly closer to that of other wealthy democracies such as Germany and France.
In terms of rankings, the expanded Child Tax Credit would move the United States closer to the mainstream: from 31st to 24th among the 34 advanced democracies with comparable data.

As an expert in public policy and social welfare, I've extensively studied and analyzed various aspects of government initiatives and programs, particularly those aimed at poverty reduction and child welfare. My expertise extends to the evaluation of the impacts of legislative changes, such as the American Rescue Plan (ARP), which introduced significant alterations to the Child Tax Credit (CTC) in the United States.

The ARP's modifications to the Child Tax Credit marked a pivotal moment in American social policy, creating a fully refundable, advanceable monthly credit. This move has been a subject of thorough examination and discussion in academic and policy circles. It's important to note that the expansion of the CTC under the American Rescue Plan was designed to address child poverty, with a particular emphasis on its potential long-term effects on poverty rates and the comparative position of the United States among other developed nations.

In the provided article, several critical concepts are discussed:

American Rescue Plan (ARP): Enacted in March 2021, the ARP introduced transformative changes to various aspects of the U.S. economy and social welfare programs. One significant provision was the expansion of the Child Tax Credit.
Child Tax Credit (CTC): The CTC underwent a significant overhaul with the passage of the ARP, transforming it into a quasi-universal child allowance. This credit was made fully refundable and advanceable, aimed at reducing child poverty.
Child Poverty Rates: The article focuses on child poverty rates in the United States and compares them with those of other wealthy nations. It mentions that historically the United States had a higher rate of child poverty compared to its peer nations.
Supplemental Poverty Measure (SPM): The article references the use of the Supplemental Poverty Measure to gauge the child poverty rate, indicating that it was measured at 5.2% in the U.S. for 2021 after the implementation of the expanded CTC.
International Comparison: The report discusses the United States' position in relation to other wealthy democracies, such as Germany and France, regarding child poverty rates. It notes that the expanded CTC could significantly reduce the U.S.'s child poverty ranking, moving it closer to the average among these peer nations.
Ranking Among OECD Nations: The article mentions that the United States, before the expansion of the CTC, ranked 31st out of 34 OECD nations in terms of child poverty rates. The expanded CTC is projected to move the U.S. to the 24th position among these advanced democracies.

The joint report cited in the article, authored by experts from Columbia University's Center on Poverty and Social Policy and UNICEF Innocenti Global Office of Research and Foresight, emphasizes the potential impact of continuing the expanded Child Tax Credit on the United States' standing in international child poverty rankings.

The report's key findings suggest that maintaining the expanded CTC could substantially reduce the U.S.'s child poverty rate, bringing it closer to that of its peer nations and significantly altering its global standing in terms of child poverty. This data-driven analysis provides essential insights into the potential implications of sustaining the expanded CTC as a policy intervention aimed at combating child poverty in the United States.