Policy Brief: Responding to critics of the new Child Tax Credit proposal
The House of Representatives has passed a Child Tax Credit expansion — now the Senate will take up the proposal. Critics of the expansion assert that the CTC will disincentivize work. Jack Landry’s new report focuses on those arguments and finds that they are not well evidenced.
As Congress considers expanding the CTC, they should focus on the proposals’ concrete benefits. The proposed reforms help ensure that low-income families with more than one child get a larger total Child Tax Credit just like middle and high-income families. And by enabling parents to use their prior year’s income to claim the credit, the reform promotes family stability. Worries about the second-order effects of these modest improvements on parents’ labor force participation are purely theoretical. When subject to scrutiny, critics’ claims have very little empirical support, nor do they make much sense on their own theoretical terms.