Paul L. Caron
Dean


Wednesday, January 8, 2020

NY Times: The Tax Break for Children, Except The Ones Who Need It Most

New York Times, The Tax Break for Children, Except the Ones Who Need It Most:

The child tax credit, begun in 1997 as a tax cut, has become an anti-poverty program. But more than a third of children don’t receive it because their parents earn too little.

The 2017 tax bill, President Trump’s main domestic achievement, doubled the maximum credit in the two-decade-old program and extended it to families earning as much as $400,000 a year (up from $110,000). The credit now costs the federal government $127 billion a year — far more than better-known programs like the earned-income tax credit ($65 billion) and food stamps ($60 billion).

But children with the greatest economic needs are least likely to benefit.

While Republicans say the increase shows concern for ordinary families, 35 percent of children fail to receive the full $2,000 because their parents earn too little, researchers at Columbia University found [Left Behind: The One-Third of Children in Families Who Earn Too Little to Get the Full Child Tax Credit]. A quarter get a partial sum and 10 percent get nothing. Among those excluded from the full credit are half of Latinos, 53 percent of blacks and 70 percent of children with single mothers. ...

Because the credit rises with earnings, a single parent with two children has to earn more than $30,000 a year to collect the full amount.

Republicans say that the credit is mostly a tax cut, not an anti-poverty program — so rightly favors taxpayers — and that the needy have other sources of aid. But a majority of congressional Democrats have backed a bill to increase the credit and include both the working and nonworking poor, essentially creating a guaranteed income for families with children.

Many rich countries have similar child allowances and less child poverty. But opponents call the idea welfare and warn it will discourage work and responsibility.

Rarely has a program grown so rapidly with such little public notice. While it began in 1997 almost entirely as a tax cut, it is already an anti-poverty program: About 30 percent of its value now goes to “refundable” credits — partial cash awards — for families with no income-tax liability.

https://taxprof.typepad.com/taxprof_blog/2020/01/ny-times-the-tax-break-for-children-except-the-ones-who-need-it-most.html

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Comments

Meant to help the working poor with families, not the poor generally, which is why there are income requirements. If it was meant to be purely an anti-poverty program, it wouldn't have been allowed to grow so much.

Posted by: ruralcounsel | Jan 8, 2020 3:33:34 AM

Sure, let's give the IRS (which is already under-staffed) another welfare program which requires people with no income to file income tax returns!

Posted by: Smitty | Jan 8, 2020 6:45:02 AM

So now even billions in child credits flow to the top; what a wonderful time to be rich (of course there was never a bad time, but 2020 is extraordinary).

Posted by: Gerald Scorse | Jan 8, 2020 8:51:18 AM

The Earned Income Tax Credit can be quite significant per family.

Posted by: Anand Desai | Jan 9, 2020 5:51:53 AM