Rather than increasing the Child Tax Credit, cut and flatten the tax rate to boost economic growth, raising the incomes of workers.
In the well-intentioned rush to support American families by expanding the Child Tax Credit (CTC), critical questions are often ignored: Aren’t we already doing enough, and is this the best way to help? It’s imperative to step back and examine the assumptions at the heart of this ongoing debate.
The child tax credit was first introduced in the 1997 Taxpayer Relief Act as a way to lower the tax burden for working families, with a $500 per child credit. It was increased a few times, including during the Bush years and in 2017 during the latest Republican tax reform. The justification has morphed into whatever its advocates happen to think it should be: It’s an anti-poverty program — hence its refundability. It’s a pro-family program — hence its growing size. It’s a fertility booster program — hence both its size and refundability. (READ MORE from Veronique De Rugy: Biden’s Super Bowl ‘Shrinkflation’ Blame Game)
While it’s not that great at meeting any of these goals, it is a true budget buster. At current levels, it costs about $1 trillion over 10 years, a price tag that will grow if it is expanded.
For the 2024 tax year, the CTC will be worth $2,000 per qualifying child with $1,700 potentially refundable through the additional child credit. The House of Representatives just passed an expansion that, if passed untouched by the Senate, would extend more benefits to lower-income families. The maximum refundable amount per child would increase from $1,600 to $1,800 for 2023 taxes filed this year.
