The Child Tax Credit

First introduced in 1997, the Child Tax Credit (CTC) has grown in size and eligibility to become one of the single largest tax credits available to middle-class families. The CTC provides a significant subsidy to almost all tax- paying families with children, and the US federal and local tax codes contain many other provisions that subsidize child rearing. In the aggregate, the CTC subsidy to families with children has grown to nearly $60 billion, placing it among the list of the largest “tax expenditures”. This is a topic that requires much more scrutiny, primarily to determine if there is a social need for $1,000 more per child. One alternative is to remove the subsidy and lower tax rates by an offsetting amount, which would benefit all taxpayers. It would also provide social benefits in terms of increased productivity and economic growth, and this is the most relevant comparison to any social benefits from additional children.

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