It would provide $3,000 per child ($4,200 per child under 6), paid out monthly through the Social Security Administration.
Max benefit of $15,000 per year.
It would not be universal: it would phase-out for those with income over $200,000 ($400,000 married filing jointly).
His proposal would be financed (until 2025) by:
-Eliminating the Head of Household filing status
-Removing child benefits from the EITC
-Eliminating the Child and Dependent Care Credit
-Eliminating TANF
-Eliminating the SALT Deduction
-Small reforms to SNAP
Some possible pros:
-Reduces child poverty (@hamandcheese and @Robert_t_Orr say by 4 percentage points).
-Does some tax code simplification.
-Makes the tax code (including the benefit) more progressive.
-Fixes an annoying feature of the EITC.
Some possible cons:
-Some families will see a reduction in benefits especially due to EITC changes.
-Reduces some pro-work aspects of the tax code (reduces phase-ins and offsets for childcare expenses)
-Not financed beyond 2025(?).
-Caps the total benefit.
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I think it's correct to say: enacting a child allowance in isolation would have little impact on work incentives.
Income effects are small. No phase-out. That's good.
2/
But that's not the entire proposal.
The allowance is replacing/reforming a number of policies that have both positive and negative incentives on work: CTC, EITC, Head of Household filing status.
3/
When we model, say, Trump's tariffs, we estimate that the level of GDP declines by 0.6%. This means that eventually GDP is going to permanently be 0.6% lower than otherwise. The growth rate, however, doesn't permanently change 2/
These results imply a drop in the growth rate by 0.15 percentage points! That means GDP will be lower than otherwise each year and the output gap will continue to grow as time goes on.
In ten years, GDP will be ~1.5% lower and in twenty, GDP will be 2.9% lower, and so on. 3/