Ford School Associate Professor Katherine Michelmore testified before the United States Senate Finance Subcommittee on Taxation and IRS Oversight, sharing her insights into the effectiveness, and drawbacks, of the first 25 years of the Child Tax Credit.
While the Child Tax Credit (CTC) is the single largest federal expenditure program for children in the U.S., the current structure of the CTC prevents approximately 19 million of the poorest children in the United States from receiving the full credit.
Michelmore pointed out that nearly all children living in the bottom 10% of the income distribution are not eligible for any CTC benefit. In contrast, nearly all children residing in households in the top half of the income distribution are eligible for the full benefit.
“The impacts of the historic American Rescue Plan Act (ARPA) reform to the CTC, which temporarily created a near-universal child benefit in the U.S., and the likely enormous long-term societal benefits of making these reforms permanent,” she cited.
The Census Bureau has estimated that child poverty declined by nearly half in 2021, keeping nearly 3 million children out of poverty. Following the expiration of the monthly payments in 2022, estimates suggested that 3.7 million more children were living below the poverty line.
Concluding, she highlighted a recent study by researchers at Columbia University estimated that the $97 billion spent on the expanded Child Tax Credit could generate $929 billion dollars in long-term societal benefits, a return on investment of more than $9 to $1.
“These calculations were based on a long line of research that points to the importance of income on children’s success in both the short and long term. In short, the evidence is clear that a permanent expansion of the CTC is likely to pay off several times over, for both the beneficiaries themselves, as well as society at large,” she said.
Video of the hearing and written testimony can be seen at: https://www.finance.senate.gov/hearings/assessing-25-years-of-the-child…More news from the Ford School