Abstract:
This paper discusses the regressive nature of tax exemptions for children compared to child allowances and estimates the decline in child poverty in several developed countries due to child allowances. The paper then estimates the decline in child poverty in the US due to tax exemptions for children and simulates the impact of various possible child allowance programs on child poverty in the US. It finds that a $3000-$4000 child allowance would reduce child poverty in the US to the level of other developed nations and, due to the costs associated with child poverty, be a cost effective policy change.