In March, Congress passed the CARES Act, a $2 trillion aid package that included $300 billion in recovery rebates for individuals. Eligible individuals who didn’t make above a certain income threshold were to receive a payment of $1,200 ($2,400 for married couples filing jointly) and $500 for each qualifying dependent child. The law declared that eligibility included anybody “other than any nonresident alien.”
Yet for millions of otherwise eligible lawful residents and U.S. citizens, the requirement to provide a separate “identification number requirement” made receiving vital relief impossible on account of being in a mixed status family. The next relief package—CARES II or Phase 4—offers an opportunity to correct this oversight and should be supported by lawmakers on both sides of the aisle.
The identification number requirement is structured so as to condition the entire payment on the status of the filers, rather than the status of each qualifying member of the household individually. If a couple files their taxes jointly, the CARES Act requires the person eligible for the rebate to include their social security number, and their spouse to include a social security number.
For eligible residents who themselves have a social security number, but who are married to an undocumented immigrant, the requirement imposes a dilemma: forgo the payment for which they (and their children) are eligible, or file separately, even though it will likely increase a households tax liability. Whichever horn of the dilemma is chosen, U.S. citizens are being penalized for who their families are during a time when economic hardship is rampant.
Children who are U.S. citizens and lawful permanent residents are currently being excluded from benefits they are otherwise entitled to receive. Despite having their own qualifying social security number, a child with a parent who does not file a return that meets the identification number requirement is excluded from receiving payments. Children in mixed status households are particularly in need of relief, since they are disproportionately likely to grow up in impoverished households.
Presumably, the reason that the identification number requirement is structured that way is the fear that undocumented parents who recieve payments for their citizen children will spend the money on something else, rather than on the child.
But notably, the current child tax credit (CTC) is structured in the opposite way, conditional only on the child having a social security number and not on the parent having one. The CTC’s structure makes good sense in light of the strong evidence that direct cash benefits to parents are highly cost-effective at improving outcomes for children.
As my Niskanen Center colleagues Sam Hammond and Robert Orr explain:
We now know from a large number of rigorous evaluations that direct cash benefits…are highly cost-effective programs for improving child outcomes in areas like health, educational attainment, and general well-being…The best evidence shows that, far from undermining the goal of child assistance, ancillary spending often explains why cash is so effective. A 2015 study of expansions to Canada Child Benefit makes this point very clear. Previous research confirmed that its expansion led to large improvements in child outcomes, like physical and mental health, but this left open the question of―how. By studying household consumption patterns before and after the expansion, researchers found that outcomes for children improved through two distinct channels: by increasing direct expenditures on inputs like education and health… and by helping pay for general household items that reduced stress and improved family stability.
Last month, Senators Marco Rubio (FL) and Thom Tillis (NC) introduced the American Citizen Coronavirus Relief Act that would amend the CARES Act to ensure that eligible individuals can receive their payments, even if they are filing with someone without a social security number.
According to our research, this would approximately disburse an additional $2.74 billion to a total of 3.1 million qualified recipients in nearly 2 million mixed-status families, including the dependent children of joint filers who were excluded from the original version of CARES.
However, it still leaves over 2.2 million dependent children who are citizens and nearly 100,000 dependent children who are lawful permanent residents without any relief.
More closely mirroring the child tax credit by making relief for dependent children conditional on the child having a social security number and not also on the parent would cost about $1.15 billion, which raises the cost of the amendment by 40%, but is a fraction of a percent of the recovery rebate provision of CARES—let alone the total cost of CARES—and would help parents struggling to care for their children in this trying time.
As Congress negotiates this next package, lawmakers should avoid penalizing mixed-status families. Economic impact payments are needed for families to address financial difficulties in the face of both a pandemic and a resulting economic crisis. Withholding aid to mixed-status families will hamper millions of households unnecessarily at a time when support is most needed.