Create a fairer tax code for families and children across America.
Since its enactment in 1997, the Child Tax Credit has become an essential tool for supporting the wellbeing of children and delivering tax relief to working-class families. And yet the existing credit falls short of realizing its full potential. Comprehensive tax reform represents a historic opportunity to strengthen the Child Tax Credit and create a fairer tax code for families and children across America.
The undersigned organizations and individuals have come together from across the political and ideological spectrum united in the view that strong families make a strong economy. That's why we are calling upon Congress and the Administration to:
- Increase the Child Tax Credit to at least $2,500;
Increase refundability to include the most vulnerable families;
and index the Child Tax Credit to inflation.
These reforms will ensure families and children are key beneficiaries of tax reform, and help to preserve the integrity of the Child Tax Credit for generations to come.
The Child Tax Credit is an investment in our future
Economists often warn against taxing investment. And yet the existing tax code penalizes investment in what may be our most important resource of all: Our children. Children born today will grow up to be future entrepreneurs and taxpayers, contributing to the solvency of programs like Social Security and Medicare, and helping to build the 21st century economy.
Research shows that the Child Tax Credit leads to improvements in child health and educational attainment that translate to increases in a child’s future earning power above and beyond the program’s cost. By working to reduce childhood poverty, the Child Tax Credit may also mitigate child poverty’s negative impact on US economic productivity and output. Increasing the maximum refundable credit size to at least $2,500 would more than double this investment in our children, while indexing it to inflation ensures the credit will continue to support a strong economy for years to come.
The existing tax code is unfair to working families
Two-thirds of Americans pay more in payroll taxes than they do income taxes, while families in the lowest income quintile pay the highest percentage of their income in payroll taxes of all. With the USDA estimating the average annual cost of raising a child to be $13,000, those same families are estimated to spend, on average, 27 percent of their annual income on the cost of raising a child. The Child Tax Credit cannot be considered a solution to all the challenges of raising a child. Yet by enhancing refundability, an expanded Child Tax Credit can help families at precisely the time when household budgets are most constrained, bringing tax relief to the vulnerable working families who are often neglected in national income tax debates.
With any major reform comes tradeoffs — something every parent understands when they make sacrifices in order to put the needs of their children first. With that in mind, an expanded Child Tax Credit must not be paid for by simply reducing other benefits going to working families and children. We stand for increased investment in families and children, not a bait and switch, and therefore call upon lawmakers to be vigilant of expansions to the Child Tax Credit designed to merely off-set cuts in other places.
Strengthening the Child Tax Credit should be central to tax reform
An expanded Child Tax Credit is an important step for investing in children, promoting stronger families, and improving the structure of the tax system. These are priorities that Americans from every background can get behind, as our ideological and political diversity demonstrates. For this and the reasons above, we the undersigned call upon Congress and the Administration to seize the opportunity to provide unprecedented tax relief to working-class families and make strengthening the Child Tax Credit a central part of efforts to revise the tax code.
Senior fellow, The Century Foundation
Executive Editor, National Review
Senior Editor, National Review
Columnist, Bloomberg View
Visiting Fellow, American Enterprise Institute
W. Bradford Wilcox
Visiting Scholar, American Enterprise Institute
Senior Fellow, Institute for Family Studies
Director, National Marriage Project, University of Virginia
Assistant Dean of Social Sciences, Endicott College
Patrick T. Brown
Graduate Student, Princeton University