Expanding The Child Tax Credit Should Be A Top Priority In 2025 Tax Debate

The Child Tax Credit (CTC) is a tax credit that helps low- and middle-income families with the cost of raising children. The CTC was first enacted in 1997, and it has been expanded several times since then. The most recent expansion of the CTC was in 2021, as part of the American Rescue Plan Act. This expansion increased the maximum credit amount from $2,000 to $3,600 per child under the age of 6 and from $2,000 to $3,000 per child ages 6 to 17. The CTC is a refundable tax credit, which means that families can receive the credit even if they do not owe any taxes.

Despite the positive effects of the CTC, some policymakers have proposed eliminating or reducing the credit. These proposals are based on the argument that the CTC is too expensive and that it does not effectively target families in need. However, the evidence shows that the CTC is a valuable program that benefits low- and middle-income families. Expanding the CTC should be a top priority in the 2025 tax debate.

Cost of Expanding the CTC

One of the main arguments against expanding the CTC is that it is too expensive. However, the cost of expanding the CTC is relatively small compared to the benefits that the program provides. For example, a study from the Center on Budget and Policy Priorities found that expanding the CTC to all children under the age of 6 would cost $100 billion over 10 years. This is a relatively small amount of money compared to the trillions of dollars that the government spends on other programs.

Targeting the CTC

Another argument against expanding the CTC is that it does not effectively target families in need. However, the CTC is already well-targeted to low- and middle-income families. The vast majority of families who receive the CTC have incomes below $75,000. Furthermore, the CTC is refundable, which means that families can receive the credit even if they do not owe any taxes. This makes the CTC a particularly valuable program for low-income families.

Benefits of Expanding the CTC

Expanding the CTC would have a number of positive effects on families. For example, expanding the CTC would reduce child poverty, improve child health, and increase educational attainment. Furthermore, expanding the CTC would increase family income in the United States, reduce the number of working hours single mothers need to work to provide basic necessities for their children, and lead to greater childhood cognitive development, school readiness, and future economic success. As stated above, a study from the Center on Budget and Policy Priorities found that the CTC reduced child poverty by 4.3 million children in 2021. Another study from the Institute on Taxation and Economic Policy found that the CTC increased family income by an average of $2,300 in 2021.

Conclusion

The CTC is a valuable program that benefits low- and middle-income families. Expanding the CTC would have a number of positive effects on families, including reducing child poverty, improving child health, and increasing educational attainment. Furthermore, expanding the CTC would increase family income in the United States, reduce the number of working hours single mothers need to work to provide basic necessities for their children, and lead to greater childhood cognitive development, school readiness, and future economic success. Expanding the CTC should be a top priority in the 2025 tax debate.

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