New Study Highlights How Child Tax Credit Leaves Poor Mothers Behind
WASHINGTON (May 4, 2022) – A study released today led by Ashley Nunes, the R Street Institute’s director of competition policy, analyzes the history of the Child Tax Credit (CTC), provides groundbreaking insight into who qualifies for relief and offers guidance on policies that will best increase eligibility for the program. The study is available on arXiv and is co-authored by Chung Yi See, Lucas Woodley, Nicole A. Divers and Audrey L. Cui.
The authors’ work sheds new light on policy debates around the CTC by assessing who benefits from what is one of the largest safety net programs in the United States. Their study differs from previous analyses of the CTC in a number of ways. One aspect of the authors’ fresh approach is their examination of relief eligibility for the program rather than the short- and long-term impacts of participation. Another key difference between this study and past work is the focus on identifying which parental groups—stratified by gender—qualify for relief, and how this is affected by changes to the program’s rules.
Leveraging data from 2003 – 2008—a timeframe in which key changes were made to the program—the study finds evidence of gender inequity in who benefits from the CTC. As the authors explain, “stringent requisite income thresholds disproportionally disadvantage single mothers, a reflection of the high concentration of this demographic in lower segments of the income distribution.” They also find that “married parents—and, to a lesser extent, single fathers—are the primary beneficiaries of the CTC program when benefits are structured as credits rather than refunds.”
The authors go on to explain how “making program benefits more generous disproportionally reduces how many single mothers—relative to married parents and single fathers—can claim this benefit.” They also note that, “increasing credit refundability can mitigate gender differences in relief eligibility.”
Regarding other aspects of the study’s unique approach, the authors explain how they distinguish their work “from previous efforts by relating long-run programmatic changes to the CTC program … to relief eligibility.” The authors’ analysis, which includes “consideration of evolving federal tax code, CTC program parameters, and demography,” affords “greater precision in estimating how specific attributes of the CTC program (rather than the program-at-large) have impacted relief eligibility over time. This facilitates identification of what program parameters may—moving forward—impact program access.”
Critically, this analysis is poised to inform ongoing deliberations about child poverty alleviation balanced with calls for fiscal discipline and debates about whether government programs such as the CTC are effective. As the authors note, the cost of child poverty alleviation programs in the United States was $118 billion as of 2018, and it’s important to factor into any serious analysis whether programs of such high cost are achieving their aims and, if not, how they should be restructured to be more effective.
They do note, however, that by design the CTC “addresses some of these concerns by tying the receipt of benefits to employment” and that “greater participation yields greater realization of these benefits.”
Ultimately, the authors explain that their “findings can inform public policy discourse surrounding the efficacy of programs like the CTC and the effectiveness of programs aimed at alleviating child poverty.”
This analysis will undoubtedly be a critical tool for policymakers, journalists, families and anyone with a stake in the critical issue of effectively eliminating the scourge of child poverty.
