Targeted Child Tax Credit

The federal expansion of the Child Tax Credit (CTC) in 2021 contributed to a record low child poverty rate for the United States; however, the expansion expired after 1 year and Congress is unlikely to reinstate the expansion in the near future. State governments are increasingly interested in implementing their own fully‐refundable CTCs, yet face strict budgetary constraints relative to the federal government. This policy report proposes a state‐level, fully‐refundable CTC that is affordable, strongly targeted at low‐income families, and complementary to federal tax credits, yet would make meaningful reductions in states' child poverty rates. Specifically, I demonstrate that the average state government can use existing spending within the Temporary Assistance for Needy Families program to fund 61% of a targeted CTC, and all states could fund the proposal with less than 2% of their total tax revenues. The targeted CTC could reduce child poverty by 10%, and deep child poverty by 21%, for the average state, with a level of spending efficiency that exceeds other income‐transfer programs

Business · Child poverty · Earned income tax credit · Economic growth · Economics · Poverty · Public economics · State (computer science · Tax credit · Financial Literacy, Pension, Retirement Analysis · Fiscal Policy and Economic Growth · Gender, Labor, and Family Dynamics

• The United States’ Record-Low Child Poverty Rate in International and Historical Perspective

  Open Access•Z Parolin, Stefano Filauro•Demography•2023

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• Employment and Labor Supply Responses to the Child Tax Credit Expansion

  Open Access•Diane Whitmore Schanzenbach, Michael R Strain•The Annals of the American…•2023

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• Implications of Alternative Designs of the Child Tax Credit

  Open Access•Elaine Maag, Nikhita Airi et al.•The Annals of the American…•2023

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• Implementing the Expanded Child Tax Credit

  Open Access•Pamela Herd, Donald Moynihan et al.•The Annals of the American…•2023

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• The Consequences of the 2021 Child Tax Credit Expansion

  Open Access•Megan Curran, Hilary Hoynes et al.•The Annals of the American…•2023

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