Two New Guaranteed Basic Income Bills Bring Different Strategies to Reducing Young Adult Poverty

Two New Guaranteed Basic Income Bills Bring Different Strategies to Reducing Young Adult Poverty
Two New Guaranteed Basic Income Bills Bring Different Strategies to Reducing Young Adult Poverty

By Makayla McDonald and Ashley Burnside

See original post here.

The COVID-19 pandemic changed the lives of many people across the globe, and its emotional, mental, and financial effects continue to reverberate. The pandemic also demonstrated the power of lawmakers to make a positive impact: Material hardship dropped after the passage of the American Rescue Plan Act of 2021, due to the federal government investing in Americans through programs like the economic impact payments, the expanded Child Tax Credit, and the expanded Earned Income Tax Credit.   

But there is more work to do, particularly as many of those effective policies have been reversed or discontinued. The Guaranteed Income Pilot Program Act of 2023 is one of the many plans that lawmakers have introduced to help improve the lives of many people in the United States. The Young Adult Tax Credit Act is another innovative bill that will invest in young people and promote economic opportunity. CLASP and New Deal for Youth are excited to endorse both of these policies for their potential to make a meaningful difference in people’s lives.

The Guaranteed Income Pilot Program Act comes as two-thirds of Americans report being worried they would not be able to cover their living expenses for one month if they lost their primary income source. This is in addition to real wages failing to keep families afloat due to inflation. 

The act would establish a three-year nationwide program to “test the viability of a federally funded income support program to prevent American families from facing permanent financial fallout and poverty from a single unexpected crisis.” Representative Bonnie Watson Coleman (D-NJ) is the sponsor for the legislation, along with nearly a dozen co-sponsors. 

The law would implement monthly cash payments to 20,000 individuals. The cash payment would equal the fair market rent for a two-bedroom apartment in the recipient’s ZIP code. There would also be a control group of 10,000 participants to compare the effects of economic security. The pilot program would be available to individual taxpayers ages 18-65. 

While we are eager to implement a federal guaranteed income program that reaches all eligible individuals, we are excited for this pilot program, which will measure the impacts of providing guaranteed income benefits to a smaller population and build momentum for the policy. We appreciate that the bill would tie the monthly payment to fair market rents, which acknowledges both the high costs of living in our nation and how rent often represents a disproportionately large portion of a family’s monthly budget.

We are also excited to endorse legislation that would implement a universal, monthly tax credit for young people. Representative Morgan McGarvey (D-KY) has introduced the Young Adult Tax Credit Act. This bill is designed based on lessons learned from a Louisville guaranteed income pilot and was developed in consultation with young people, including New Deal for Youth Changemakers. We applaud Representative McGarvey for collaborating with young people while developing the legislation. 

The Young Adult Tax Credit Act would provide a universal $500 monthly payment to all 18- to 24-year-olds in the United States, including its territories. The payment would be an advanced, refundable tax credit provided by the IRS and would be available to anyone who has a Social Security number or an Individual Taxpayer Identification Number. The bill would also direct the IRS to conduct targeted outreach about the program to ensure that all young people know about the payments and how to access them, including those who are unbanked and/or less likely to file taxes.

Creating a universal program, rather than targeting the benefit based on factors such as income, will ensure that the tax credit is an investment in all young people. A universal benefit reduces the risk that the program will mandate burdensome eligibility and documentation requirements to receive the payment, making the program easier to both administer and access. However, creating a fully universal benefit also increases the total recipient population and the program cost. Letting children and families remain in poverty also has immense costs for our society in both the short and long-term. Lawmakers should consider these tradeoffs.

Implementing a refundable tax credit targeted at young people is critical because young adults are largely left out of our nation’s current anti-poverty programs. In addition, young adults face poverty at high rates when compared to other age groups. According to the Official Poverty Measure, 15.3 percent of young adults ages 18 through 24 were living under the Federal Poverty Line as of 2022. When using the Supplemental Poverty Measure (SPM), the rate increases to 17.7 percent of all young people; but 22.5 percent of young people of color lived in poverty as measured by the SPM. The expanded CTC that was temporarily implemented in tax year 2021 cut child poverty nearly in half, especially benefitting Black and Latino kids. The Young Adult Tax Credit has the potential to dramatically reduce poverty for young adults, especially for young adults of color.

Both the Guaranteed Income Pilot Act and the Young Adult Tax Credit Act would provide substantial investments to young people. A New Deal for Youth envisions a world where the economy is designed to uplift all young people and abolish structural barriers. The Guaranteed Income Pilot Act and the Young Adult Tax Credit Act would accomplish this by providing young people with unrestricted investments. CLASP and A New Deal for Youth urge Congress to pass these bills to invest in and support young people.

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