Policy memo: Shaefer and Cooney on "Expanding the Child Tax Credit in the age of COVID-19"

January 21, 2021

As the Biden administration embarks on its first hundred days, experts from the Gerald R. Ford School of Public Policy have produced a series of policy briefs on key issues. Download a PDF of this brief or read the web-formatted version below.

By H. Luke Shaefer, associate dean for research and policy engagement, Hermann and Amalie Kohn Professor of Social Justice and Social Policy; and Patrick Cooneyassistant director of economic mobility at Poverty Solutions


Child poverty in the United States is stubbornly high. Research from the National Academies of Sciences also finds that child poverty in the U.S. is much deeper than in peer countries. Households with children experience the highest rates of food and housing hardship of any age group, with Black and brown children disproportionately impacted.

COVID-19 exacerbated these challenges. CARES Act income support provisions stabilized  poverty in the pandemic’s early months but did  not do enough for families with children hit  hard by lost employment, services, and school  closures. The federal government should do more for families during the greatest public  health and economic crisis of modern times. 

Equity concerns about the existing Child Tax Credit 

Two important federal programs in fighting child poverty are the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). However, families with low or no earnings fail to fully benefit from them, or are left out completely, leaving a gaping hole in our safety net. 

Estimates find that one-in-three families with children in the U.S. do not receive the maximum CTC ($2,000) due to no or low earnings. Among Black and brown children, fully half live in families that don’t receive the full credit, compared to 23 percent of white children. Seventy percent of children in female headed households do not receive the full credit, compared to 25 percent in married households. 

Transforming the Child Tax Credit into a Child Allowance 

A broad group of poverty scholars support a proposal to effectively transform the Child Tax Credit into a child allowance by making it fully refundable—making the full credit available to families with no or very low earnings—and  increasing the credit size. Such an expansion would recognize the challenges faced by poor and middle class families while reducing stigma and boosting political viability. Such a child benefit is the norm in many western nations and has been shown to effectively reduce child poverty. 

The American Family Act of 2019 (AFA), sponsored by Senators Michael Bennet (D-CO) and Sherrod Brown (D-OH) and Representatives Rosa DeLauro (D-CO) and Suzan DelBene (D-WA) would reform the CTC to better support struggling families. AFA expands the maximum credit to $3,600 per year for children under 6, and $3,000 for children 6 to under 17; makes the credit fully refundable so extremely poor families receive the full benefit; and disperses funds monthly to address extreme income instability.

Estimates from Columbia University’s poverty center find that AFA would reduce child poverty by 45 percent, reduce poverty among Black children by 52 percent, 62 percent among Native American children, and would effectively eliminate the most extreme forms of child poverty.

Both the HEROES Act—which passed through the U.S. House of Representatives—and President-Elect Biden’s campaign tax plan call for an AFA-like expansion of the CTC during the pandemic. Senators Mitt Romney and Rob Portman have highlighted the possibility of bipartisan cooperation on this, and a group of conservative scholars recently expressed support for CTC expansion with full refundability.

Children have long been amongst the poorest in America. Strikingly, this evidence-based policy is supported by the President Elect, leaders in Congress, some members of both parties, and scholars across the political spectrum. Thus, even during uncertain times, the table is set to do something transformational for struggling families with children.  


Download this memo