The GOP Tax Plan Fails the Children

The GOP Tax Plan Fails the Children

By not expanding the Child Tax Credit, Republicans have missed a chance to help every struggling American family.


Having failed on a third and potentially final attempt to repeal Obamacare, Republicans are now betting they can pull off tax reform. To get the ball rolling, they released an outline in September with some of the bare bones of what they hope to achieve.

The proposals are vague, but one thing 
is clear: The rich will pay less. That’s accomplished by things like eliminating the 
estate tax; doing away with the alternative 
minimum tax, which ensures that the wealthy at least pay something; and reducing the top rate on high incomes.

Despite this regressive morass, there was still some hope that the Republican plan would help the most vulnerable among us: children living in poverty. The rumor had spread that it would make the current child tax credit (CTC)—
worth up to $1,000 per child for working parents—much more generous and widely available 
after Ivanka Trump spent time lobbying for it.

But those hopes faded once the details were out. The GOP plan made only a fuzzy promise to “significantly” increase the CTC, while sticking to current policy on how much is refundable and the rate at which it phases in. Currently, families earning less than $3,000 a year can’t get the child tax credit, and even many who do qualify can’t claim the full amount: It gets phased in at the rate of 15 percent for every $1 they earn. Worse, many parents may see no net benefit from the Republicans’ new and larger CTC because it will be coupled with a pullback in other deductions that benefit them.

Yet progressives and conservatives alike 
have called for an expansion of the child tax 
credit that would reach all parents. So 
it’s baffling that congressional Republicans 
failed to get on board.

The fundamental idea is simple: Increase the amount of the CTC while making it fully refundable. Hillary Clinton put forward something like that during her presidential run, proposing to double the credit amount for children under 5 and let families qualify with the first dollar of income they earn. That plan would have lifted about 1.5 million people out of poverty and increased incomes for 14.2 million families.

Even Clinton’s plan, however, phased the credit in gradually. For a better approach, you could look to the Center for American Progress’s plan to eliminate the earnings requirement and make the CTC fully refundable, so that every family could get the full amount.

Ideas for enhancing the CTC don’t just reside on the left. Senators Marco Rubio and Mike Lee called for a $2,500 credit in 2015 that would offset payroll taxes—although because it was a credit and not a refund, some poor families wouldn’t have gotten the full amount. The libertarian Niskanen Center has proposed making the CTC fully refundable and increasing it to $2,000 per child. Even better, the money would flow to parents in monthly payments, rather than a yearly lump sum at tax time. (Unfortunately, the proposal also calls for eliminating other programs for poor children in order to pay for it.)

These plans all have their pluses and minuses, but there is some consensus among them—namely that the child tax credit should be worth more and be made available to more families.

Embracing a larger CTC for everyone would move the United States closer to a true child allowance, something found in other developed countries like Finland and France. A universal check cut to all parents, accomplished through the child tax credit, could have huge benefits. Giving families $300 a month for each of their children could lower child poverty by 42 percent and lift 11.5 million people out of poverty. And there’s ample evidence that boosting parents’ incomes helps children’s development and economic prospects later in life.

A benefit paid out to all parents would force a country that claims to value family to live up to its own rhetoric. Raising a child is expensive and associated with a significant drop in income. The least we can do is get behind an idea that eases the burden on parents, even just a bit. Hopefully, Republicans will soon clarify how much more generous they want to make the child tax credit—but they’ve already ignored policy changes that would help every struggling family. 

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