How the expanded Child Tax Credit reduced poverty – why we need the Supplemental Poverty Measure 


November 9, 2023


Although children in all 50 states benefited from an expanded Child Tax Credit (CTC), new data show that the effect was most felt among rural, low-cost states, some of which experienced drops in child poverty by more than 50 percent when the CTC was temporarily expanded during the pandemic. 

The data, contained in a report published in October by the Center on Poverty and Social Policy at Columbia University, found that during 2021, when the expansion was in effect, child poverty dropped the most in rural, low cost-of-living states such as Alabama (down 52.5%), Maine (down 52.2%), Missouri (down 51.5%) and Wyoming (down 51.7%). 

By contrast, higher-cost, more urban states saw smaller drops in poverty, although the reductions were still dramatically large. In New York, child poverty dropped 43 percent; in California, it was down 41.6%; and in Massachusetts, the decline was 40.5%. 

Columbia University researchers derived the data from the Census Bureau’s American Community Survey Supplemental Poverty Measure (SPM) research file. Their findings show the usefulness of the SPM in assessing the effectiveness of government policies in reducing poverty. They also show the wrong-headedness of a recent House Ways and Means Work & Welfare Subcommittee hearing, where witnesses called by Republicans criticized the SPM and at the same time made untrue claims about CTC expansion. 

The thrust of the hearing was to claim that the Biden Administration wants to turn the SPM into the means of determining eligibility for government programs, and that doing so would shift government spending away from low-cost rural states and to states with higher costs of living.  First, there is no plan by the Biden Administration to change the way eligibility is determined.  The SPM is a research tool. Second, as the Columbia researchers showed, findings using the SPM’s methods demonstrated that one government program, the expanded Child Tax Credit, provided more help to low-cost states, not less. 

CHN submitted written testimony to the committee to set the record straight In its statement. CHN praised the SPM as a research tool and extolled the virtues of CTC expansion. (You can read the testimony of CHN Executive Director Deborah Weinstein here.) 

CHN wrote that it “has supported the Supplemental Poverty Measure for many years because it provides critical data on how federal and state policies increase or reduce poverty…It is important to note that the SPM is a research tool. It is not used in calculating eligibility for benefits, and the Biden administration has made no such proposal.” 

Regarding the CTC, CHN added: “The SPM allows us to see that the expanded Child Tax Credit reduced poverty in 2021 by 43%. It allows us to break out the value of the Child Tax Credit from the Economic Impact Payments and other pandemic-era policies that also contributed to important reductions in poverty and hardship.” 

However, CHN noted that the U.S. can, and should, find better ways to assess eligibility for government programs. “While the administration has not proposed this change now, the Coalition on Human Needs is open to utilizing a poverty definition similar to the SPM for the purposes of establishing eligibility for benefits,” CHN wrote. “It is acknowledged by most researchers that the current method for calculating official poverty guidelines does not take into account many income sources available to families or individuals or the expenses they incur. Failure to take these needs into account has contributed to the high cost of poverty and near-poverty in this nation in lifelong poor health and mortality outcomes.” 

Sound policymaking relies on research tools such as the SPM. The Census Bureau’s Supplemental Poverty Measure analysis shows each year how many people are lifted out of poverty by a large number of programs, including the Child Tax Credit and Earned Income Tax Credit, but also Social Security, nutrition benefits, public housing, and unemployment insurance. It documented that the Child Tax Credit alone lifted 2.9 million children out of poverty in 2021, when the expanded CTC was in place. It also showed that this substantial progress was reversed in 2022, after the CTC expansion expired.  Congress needs to pay attention to what works. The Supplemental Poverty Measure provides this crucial information.  If Congress cares about reducing poverty, it needs to heed the SPM’s findings and restore the expanded Child Tax Credit.    


child poverty
Child Tax Credit expansion
Supplemental Poverty Measure