On September 15, millions of families will receive the third installment of the monthly Child Tax Credit (CTC) payments that began in July. The positive impact that these payments have had on households, especially households of color and those with low incomes, is undeniable. The expansion of the CTC made the full credit available to 27 million children whose families' incomes were too low to qualify previously, including about half of all Black and Latinx children. And just in its first month, the expanded credit kept three million children out of poverty, including 543,000 Black children and 1.1 million Latinx children. 

In technical terms, the monthly payments are an expansion of an existing tax credit. Put differently, the CTC acts as “guaranteed income” for families with children. Guaranteed income is a monthly, cash payment to individuals with no restrictions on how it can be spent. It is not conditional on the recipient meeting certain criteria, like being employed, as is the case with some public benefits programs. Finally, unlike universal basic income, which would be distributed to every adult in a population, guaranteed income is more targeted – in the case of the CTC, to families with children who have incomes below a certain threshold. Depending on how it is structured and to whom it is targeted—for example, to people with lower incomes or to a specific racial or ethnic group—guaranteed income could even reduce racial income and wealth gaps. 

These features are what make the monthly CTC payments so effective. Households can expect to receive a set sum of money at the same time each month, allowing them to plan ahead and better manage the income volatility that many low-income families experience. The fact that the cash payment is unrestricted also gives families the flexibility to spend it based on their own households' needs. Data from SaverLife members shows that most spent their first CTC payment on necessities, like rent or groceries, while others chose to save it or use it to pay down debt. 

Unlike universal basic income, which would be distributed to every adult in a population, guaranteed income is more targeted – in the case of the CTC, to families with children who have incomes below a certain threshold.

- Myrto Karaflos

While the CTC demonstrates the success of a guaranteed income model at the national level, there are also many pilot programs underway at the local level, from Alexandria, VA, to Oakland, CA. One example, the Stockton Economic Empowerment Demonstration (SEED), which was a two-year guaranteed income pilot led by former Mayor Michael D. Tubbs, showed promising results for participants. The $500 monthly payment they received helped them pay for unexpected expenses and reduced income volatility. The money also enabled recipients to find full-time employment by freeing up their time to pursue additional training or education and apply for new positions. Finally, participants experienced improvements in emotional health and well-being. 

These findings clearly show that guaranteed income can be an effective way to support families in need. And now, the monthly CTC payments serve as proof of concept that a guaranteed income program can be implemented at the federal level as well—whether labeled as such or as an "expanded tax credit."  

Whichever name the program is given, the bottom line is that families need help, especially in light of the COVID-19 pandemic. The expanded CTC – along with the expansion of the Earned Income Tax Credit (EITC) – are only effective for one year under the American Rescue Plan. If extended beyond 2021, the CTC would reduce child poverty to below 10% in nearly all states. Please join us in asking your members of Congress to make these expanded tax credits permanent. Even if it is not a guaranteed income program in name, the CTC can keep millions of children out of poverty. That is our goal.