A Step in the Right Direction: The Expanded Child Tax Credit Would Move the United States’ High Child Poverty Rate Closer to Peer Nations
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.
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.
Suggested Citation
Collyer, Sophie, Megan Curran, Irwin Garfinkel, David Harris, Dominic Richardson, and Christopher Wimer. 2022. “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 and UNICEF Innocenti, Global Office of Research and Foresight. Access at: https://www.povertycenter.columbia.edu/publication/2022/child-tax-credit-and-relative-poverty