The cornerstone of pro-family economic policy is per-child tax relief.
In the 1994 midterm elections, conservative Republicans were swept into Congress after a campaign centered on the “Contract with America.” A hallmark of this agenda was reducing the tax burden on working families by creating a Child Tax Credit, which Republicans succeeded in doing with the enactment of the Taxpayer Relief Act on August 5, 1997.
Twenty years later, the American people have once again given Republicans in Congress the opportunity to reform the tax code, which is outdated, overly complex, and unfair to working families. The upcoming debate about tax reform should be grounded in the realities they face every day: a fixed budget, stretched paychecks, and tough choices about putting food on the table and participating in kids’ sports leagues.
As the party of working families, Republicans must not let this opportunity go to waste. We must ensure comprehensive tax reform includes specific and meaningful tax relief for parents. After all, families are the fundamental building blocks of our communities, and the health of our society depends on families being able to provide safe and secure homes, raise active citizens, and love their children unconditionally in ways no other social institution can. Families are how values are passed on from generation to generation. We simply cannot have a strong nation without strong families.
Unfortunately, the rising costs of housing, food, health care and child care means it is more expensive than ever to have and raise children. Meanwhile, our federal tax code treats parents unfairly by effectively taxing them twice, discouraging family formation. In addition to payroll taxes on their paychecks, parents also bear the cost of raising the next generation of workers whose earnings will fund federal retirement benefits. This is an outdated framework that enriches government and special interests instead of empowering parents to make the best decisions for themselves and their children, and we must modernize it if we want to help more people succeed and achieve the American Dream in the 21st century.
Republicans should take a step toward addressing these inequities by enhancing the Child Tax Credit to better match the rising cost of raising a child. The current $1,000-per child credit is inadequate and inaccessible to some working families. Increasing the Child Tax Credit to $2,500 and applying it to both income and payroll taxes, an idea similar to my proposal with Senator Mike Lee (R-UT), would be a significant improvement that bolsters families’ bottom line and corrects this inequity. The bottom four income quintiles pay more in payroll taxes than they do any other tax, so increasing the refundability of the credit will meet the ever-changing needs of working class families and help the parents who need it most.
Enhancing the Child Tax Credit in this way would also promote family flexibility. Families can claim the credit regardless of parenting or work arrangements, empowering working and stay-at-home parents equally and increasing their ability to choose the best parenting arrangement for their situation.
Such an expansion doesn’t have to increase the federal budget deficit. Loopholes for the affluent and special interests can be reduced or eliminated, putting working families first. Verification measures can ensure that tax credits only go to U.S. citizens and lawful residents. Complicated provisions for families can be simplified, reducing waste and fraud. Even modest steps toward these goals would more than pay for a robust expansion of the Child Tax Credit.
As Congress crafts comprehensive tax reform legislation, Republicans should keep these principles in mind. If the final product President Trump signs into law includes an enhanced Child Tax Credit, it will mean real relief for millions of working class Americans who have been left behind by Washington in recent years, and real progress in replenishing the strength of the American family.