New Evidence: The Expanded Child Tax Credit's Disincentives
In my previous post, I described how budget gimmicks prevent politicians from having to explain whether or not the policies they push are pushing desirable social and financial objectives. Here is a good example. Two weeks ago, I wrote about the serious problem with Congress’s attempt to expand the child tax credit. Well, new evidence suggests that opponents of the programs are correct about its short and long term consequences, which go beyond its $1.6 trillion cost over a decade. This new working paper is by Kevin Corinth, Bruce Meyer, Matthew Stadnicki, and Derek Wu and was published by the University of Chicago’s Becker Friedman Institute. The authors find that the behavioral effects of the expanded CTC, such as creating incentives for some parents to work less or leave the workforce, are a much bigger issue than previously documented. The Wall Street Journal Editorial Board has since picked up on these disincentive effects as well.
AEI’s Scott Winship has a great summary. Here is a tidbit:
The whole thing is a must read here.
The bottom line is that the cost of the child credit expansion isn’t the only or even the biggest concern we should have. Its impact on some people’s willingness to work, marry, and ultimately on intergenerational mobility and child poverty should be front and center of anyone’s concern with this program expansion.
Veronique de Rugy is a Senior research fellow at the Mercatus Center and syndicated columnist at Creators.