Child Poverty and Opportunities in Tax Policy: Reforming the Child Tax Credit (CTC) to Create a Universal Child Allowance—APPAM Innovation Session
Christopher Wimer (bio), Columbia University
Jane Waldfogel (bio), Columbia University
H. Luke Shaefer (bio), University of Michigan
Timothy Smeeding (bio), University of Wisconsin – Madison
Sophie Collyer (bio), Columbia University
Description of Research: Our research demonstrates how existing tax policy, such as the Child Tax Credit, can be improved upon to achieve national and state-level goals like reducing the rate of child poverty– which is higher in the United States than any other developed nation. The Child Tax Credit is the closest policy that the U.S. currently has to a universal child allowance. But under the current structure of the credit, many low-income families are left out (the credit also phases out for families with higher incomes). Inequalities in the benefit structure have been exacerbated by the recent changes to the CTC under the Tax Cuts and Jobs Act (TCJA). Approximately 1/3rd of all children are in families who earn too little to get the full $2,000 per child tax credit. For those policymakers determined to reduce child poverty, we provide a well thought out proposal that builds on exiting policy and compelling estimates of its potential impact.