A History and Analysis of Current Proposals to Expand the Child Tax Credit
Project GitHub Repo: https://github.com/grantseiter/Tax-Benefits-Of-Parenthood
Since 1917, tax filers with children have received ever-increasing federal income tax benefits. The tax benefits include deductions for each child or other dependent, lower tax brackets for head-of-household filers compared to single filers with similar incomes, and tax credits for children and childcare expenses. The tax credits have nonrefundable portions that are limited to tax liability and refundable portions that can be received in cash if they exceed tax liability.
Recently, both Democrat and Republican lawmakers have advanced proposals to further expand the most prominent child tax benefit, the child tax credit (CTC). Created in 1997 as a $500 nonrefundable credit, the CTC was significantly expanded over the past two decades and is now the largest single tax benefit for households with children.
In this report, we begin by detailing the origins of the tax benefits—including the CTC—afforded to filers with children. We discuss various methods and tax principles applicable in analyzing these benefits. We analyze the budgetary, distributional, and incentive effects of current-law child tax benefits. We frame the debate over expanding the CTC in the context of its growth and current budgetary impact. And finally, we evaluate recent proposals to further expand the CTC, including those in President Joe Biden’s American Rescue Plan, recent legislation adopted by the House Committee on Ways and Means, and Sen. Mitt Romney’s (R-UT) proposed Family Security Act.
Python
- Alex Brill - American Enterprise Institute (AEI), Washington, D.C.
- Alex Brill is a resident fellow at the American Enterprise Institute (AEI), where he studies the impact of tax policy on the US economy and the fiscal, economic, and political consequences of tax, budget, health care, retirement security, and trade policies.
- Kyle Pomerleau - American Enterprise Institute (AEI), Washington, D.C.
- Kyle Pomerleau is a resident fellow at the American Enterprise Institute (AEI), where he studies federal tax policy. He writes on various tax policy topics, including corporate taxation, international tax policy, carbon taxation, and tax reform.
- Grant M. Seiter - American Enterprise Institute (AEI), Washington, D.C.
- Grant M. Seiter is a research assistant at the American Enterprise Institute (AEI).
This repository contains code and data used in a study on three recent proposals to expand child tax benefits (The Biden Administration Proposal, The Ways and Means Committee Proposal, and The Family Security Act).
“The Tax Benefits of Parenthood: A History and Analysis of Current Proposals,” Alex Brill, Kyle Pomerleau, and Grant M. Seiter, AEI Report, American Enterprise Institute (February 23, 2021).
Disclaimer: The American Enterprise Institute for Public Policy Research (AEI) is a nonpartisan, nonprofit, 501(c)(3) educational organization and does not take institutional positions on any issues. The views expressed here are those of the author(s).