A Personal Milestone and a Renewed Distaste for the Child Tax Credit
The child tax credit is fundamentally flawed. It should be repealed.
My family recently grew! We've welcomed our second child, a healthy baby boy.
On a personal note, having kids has made me something of an evangelist. Kids are awesome. Their benefits outweigh their costs by orders of magnitude (at least in the early years—I'll report back on the later ones). Go have a kid, or two. It’s great.
But now, back to tax policy.
As I’ve written before, the 2017 expansion of the child tax credit (CTC) from $1,000 to $2,000 was less a new benefit and more a reshuffling of existing child subsidies in the tax code. The larger credit replaced the old system of child and dependent exemptions, ultimately making the tax code more progressive, but not meaningfully expanding the child subsidy in terms of absolute fiscal cost.
The House’s recently passed tax bill would make those 2017 reforms permanent and temporarily boost the credit by an additional $500 through 2028. It also includes a grab bag of other family-focused subsidies, including a permanent paid family leave program, bigger employer childcare subsidies, refundable adoption credits, and government-financed child savings accounts (Trump Accounts).
My view is simple: we shouldn’t have any of these targeted tax programs. Instead, we should pursue lower tax rates across the board.
The policy discussion on the CTC is uniquely muddled. Depending on who you ask, the credit is intended to serve multiple conflicting purposes: provide tax relief to middle-income families, serve as an anti-poverty tool for children, encourage higher birth rates, signal society’s commitment to families, reward work, offset the cost of raising kids, and fix an inequity in Social Security financing.
But one credit can’t do all these things. In trying to do everything, it ends up doing none of them well. The CTC is poorly targeted for each of these goals and incoherent as a matter of policy design.
Vanessa Brown Calder and I laid out many of these problems in our piece, The Case Against the Child Tax Credit. The most common rebuttal we heard was: “You don’t have kids—you just don’t get it.”
Now I have two. And I still don’t buy it.
The CTC is fundamentally flawed. It should be repealed. Better to lower tax rates for everyone than to try, and fail, to solve every family policy problem through the tax code.
