Is the Child Tax Credit a Bad Idea?
Popular as the CTC may be, calls for increasing it for low-income families are based on two problematic narratives.
Congressional efforts to expand the Child Tax Credit (CTC) in this year’s spending bill were unsuccessful, but Congress seems intent on increasing it, as it has done so regularly since the CTC was first legislated more than 20 years ago. Popular as the CTC may be, calls for increasing it for low-income families are based on two problematic narratives. One is the idea that the current CTC fails the lowest-income Americans — an argument that ignores the broader social safety net. The other is the idea that the CTC, which is not linked to work, can reduce poverty without affecting employment.
Created in 1997, the CTC has historically received a great deal of bipartisan support. It began as a small tax break of $500 per child for tax-paying families, but it has since been increased over the years to $2,000 per child, including up to $1,400 per child in refundable tax credits for families who owe no federal income taxes. The most recent proposal from Sens. Mitt Romney (R-UT) and Michael Bennet (D-CO) would have increased the CTC to $2,500 for children age 6 and under and made the first $1,500 fully refundable (the first $1,000 for children older than 6). In practical terms, this means low-income families would get a cash payment of at least $1,500 and up to $2,500 for each of their children under the age of six, which is roughly one-third more than what they currently receive from the partially refundable CTC.
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