Fewer Programs, Fatter Checks

Replacing a maze of credits with one monthly payment per child

By Matt Sly

Status: Working draft. This is a companion proposal to the Fair and Simple Tax Act. Feedback welcome at me@mattsly.com.

The Problem

The federal government currently delivers benefits to families through at least nine overlapping programs: the Child Tax Credit (CTC), Additional Child Tax Credit (ACTC), Earned Income Tax Credit (EITC), American Opportunity Tax Credit (AOTC), Lifetime Learning Credit (LLC), student loan interest deduction, educator expense deduction, Coverdell Education Savings Accounts, and the employer educational assistance exclusion. Each has its own eligibility rules, phase-outs, and filing requirements.

The EITC alone has an improper payment rate of roughly 25%, not because recipients are cheating, but because the rules are so complex that both filers and the IRS get the math wrong. Take-up rates for complex credits hover around 78% for the EITC, meaning roughly one in five eligible families never receives the benefit they’re owed.

The Proposal

Replace all of the above with a single universal monthly payment per child. Income-phased. Delivered monthly (not as an annual surprise at filing time).

The 2021 expanded CTC experiment ($300/month under 6, $250/month ages 6-17) proved the model works: child poverty dropped roughly 30% in six months. Take-up rates on simple universal payments approach 100%.

Key design principles:

Every eliminated program’s budget gets redirected into the child payment. Consolidation isn’t austerity. It’s efficiency redirected into generosity.
Revenue from eliminated education tax programs (roughly $30-35 billion per year) adds approximately $40/month per child to the payment.
Monthly delivery smooths household cash flow (low-income families can’t wait 12 months for a lump sum).

Open Questions

Payment amount and phase-out structure. The 2021 experiment provides a baseline, but the consolidated program (absorbing EITC and education benefits) would have a larger budget. Calibration needed.
Childless low-income workers. The EITC currently covers childless workers. The income tax reform proposal’s 0% bracket plus FICA elimination partially replaces this, but there may be a gap for low-income childless adults that needs specific analysis.
Education benefits for adults. Absorbing the AOTC and LLC into a child payment works for families, but adult learners without children lose a benefit. Needs consideration.

Revenue Impact

Net cost depends on calibration. The consolidated budget of eliminated programs is significant (EITC ~$70B, CTC ~$120B, education credits ~$30-35B), so the question is whether the new payment amount exceeds, matches, or falls below the combined current spend. The administrative savings from eliminating nine separate programs with nine sets of compliance rules are real but harder to quantify.

Relationship to Other Proposals

Income tax reform: The child payment enables filing status simplification (Head of Household becomes unnecessary when dependent benefits are delivered directly).
FICA reform: FICA elimination provides an immediate ~8% raise for working families, complementing the monthly payment.
Lifetime Gains Framework: Independent, but both share the “fuel the climb” design tenet.

This proposal is part of the Fair and Simple Tax Act. All policy positions are the author’s own.