The Child Tax Credit Is More than a ‘Subsidy’
Analysis. Is the child tax credit simply a “cash for kids” scheme? That seems a rather grinch-like view to me, so I was a bit surprised to see it espoused earlier this week by the Wall Street Journal editorial board, an influencer whose opinions I often find significant and helpful.
“Congress is returning to Washington for a lame-duck session, and Democrats think they’ve found the perfect holiday gift for hard-to-shop-for American voters: Subsidies for children,” the board wrote. “The left and some Republicans will argue that only childless ghouls could oppose cash for kids, but the tax credit is a parable about good intentions, unintended consequences, and the insatiable entitlement state.”
Now, I’m not going to call the editorial board writers ghouls — as I said: I respect them. But count me, as a conservative, wary of connotations raised here with such terms as “subsidies” and “cash for kids.” For one, that line of thinking presupposes full government discretion over resources God gives me to use for taking care of my family — as if the government were a parent giving me an allowance out of its all-encompassing coffers, rather than an association I am contributing to for the common good. In addition, those terms cast a shadow on the tax code’s honoring the role of families in our society. I wonder if the writers would have a similar approach to retirement investment, long-term capital gains, or other tax incentives.
And, for what it’s worth, I also disagree with the idea that this policy should be viewed simply as a political wedge or a partisan bargaining chip.
The basic intent of the child tax credit (CTC) is to help American families keep more of their resources to cover daily expenses — a policy all the more important in the face of recent price hikes on such basic necessities as food, housing, and fuel. It’s a policy that has been valued on both sides of the political aisle. In fact, the CTC was doubled to $2,000 per eligible child in 2017 by the GOP-led Congress as part its tax law overhaul, and then Democrats boosted that further, to $3,000 per child ($3,600 for kids under 6) last year.
That increase expired at the end of last year, but it appeared to have had an effect in supporting families, particularly the most needy. In September, the U.S. Census Bureau released data showing that the CTC lifted more than 5 million Americans — including 2.9 million children — out of poverty last year.
Emphasizing the same theme in an article last fall when the enhanced CTC was active, Kenneth Hodder, national commander of the Salvation Army, and Walter Kim, president of the National Association of Evangelicals, said: “The rate of food insecurity has been significantly reduced, and families are now better able to provide the basic necessities that many of us take for granted. Fewer children are going to bed hungry or living with the fear of homelessness, and fewer parents are having to make agonizing decisions about whether to buy prescriptions or pay the electric bill.”
But not everyone liked the expanded CTC, specifically its distribution as direct monthly payments, its lack of work income requirements, and its full refundability to parents, whether or not they had any tax liability. Like the WSJ editorial board, some Heritage Foundation scholars viewed the expanded CTC as a “checks for children scam” — one intended to grow a welfare state even as its lack of work requirements undermined years of efforts to combat child poverty and to support two-parent households.
In a more recent article the Heritage researchers wrote, “If the Biden child tax credit — or any version of cash payments without firm ties to work and marriage — is made permanent, it will undermine the economy, self-support, social well-being, and upward mobility.”
They suggested that pro-life and pro-family members of Congress might be tempted to revive an enhanced CTC, but they should steer clear. However, I disagree with that sentiment.
Don’t misunderstand me. The values of hard work and of marriage should absolutely not be discouraged — quite the contrary. But that doesn’t mean the CTC itself should be cast aside. In fact, it’s an argument for why conservatives should engage in the conversation with a goal of getting much accomplished.
Again, the CTC in general is intended to honor families. It’s intended to help parents keep more of their resources invested in their kids rather than in government coffers. It’s no more a scheme than structuring the tax code to underscore any other perceived cultural good, such as home ownership, saving for retirement, investing in businesses, and more. And without good faith action, one might argue that Congress is setting up working families for a significant hike in tax liability that might come as a surprise in April for many that are already facing constricted personal budgets in the face of inflation.
Thankfully, a number of conservative leaders are open to a broader conversation on the CTC. Sen. Marco Rubio, R-Fla., for example, views an expanded child tax credit for working families as a key to promoting a culture of life in post-Roe America.
“Working parents do more for America’s future than almost any other group — they deserve to keep more of their hard-earned income,” he wrote in June as he outlined his plan for the Providing for Life Act.
Rubio’s partner in the House on this bill, Rep. Ashley Hinson, R-Iowa, similarly said: “I am committed to supporting moms both during pregnancy and once their babies are born. … The policies in the Providing for Life Act, particularly the expanded Child Tax Credit, will make a meaningful difference for women and families in Iowa and across the country.”
And a Family Research Council leader added: “Family Research Council helped author the original child tax credit in 1997 as a way for the federal government to alleviate the extra financial responsibilities placed upon parents raising children. This package expands upon that principle by reforming important health and welfare programs to be more supportive of life, and affirms the principle role that families play in American society.”
Clearly, there are good reasons for advocates of life and American families to pursue enhanced versions of the CTC rather than allowing it to lapse backwards in the face of inflation and budget crunches for households. In fact, some observers, such as Brad Wilcox, of the American Enterprise Institute; and Wells King, of American Compass, believe that this is a key moment for “conservative policymakers to define what it means to be truly pro-life and pro-family” — including providing a more generous CTC ($800 per month for pregnant women, $400 per month for children under 6, and $250 per month for children ages 6 to 18) to a broader set of working families.
Even with debates over work requirements and direct payments, there are those on both sides of the political aisle who seem interested in some manner of increased tax credit to help parents in today’s difficult financial climate. Will legislators be able to look beyond a partisan winner-take-all mentality and seek a way forward on the CTC and other provisions that help families keep and steward more of their hard-earned dollars in this difficult time? Will you pray so?
How are you praying for American families? Share your prayers and scriptures below.
Aaron Mercer is a contributing writer with two decades of experience in the Washington, D.C., public-policy arena. Photo Credit: Canva.
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