Tax Policy Center: Children
Tax Policy Center reports on: Children - The Tax Policy Center is a joint venture of the Urban Institute and Brookings Institution. The Center is comprised of nationally recognized experts in tax, budget, and social policy who have served at the highest levels of government.

• Growth and Decline in Tax Credits For Families With Children
  Under current law, there are three major tax credits that affect families with children: the earned income tax credit, the child and dependent care tax credit, and the child tax credit.
• The Widespread Prevalence of Marriage Penalties : Testimony Before the Subcommittee on the District of Columbia, Committee on Appropriations, United States Senate
  Citizens pay an overall marriage penalty when their combined social welfare benefits less taxes are lower when they are a married couple than when they are two single individuals. Because marriage is optional, marriage penalties or subsidies are assessed primarily for taking wedding vows, not for living together with other adults (although there are some exceptions).
• Who Gets the Child Tax Credit?
  In 1997, Congress created a $500 per child tax credit (CTC). It has since been increased to $1,000 and made available to some lower-income families with children, even if they had no tax liability. Still, many low-income families (as well as some with high incomes) receive less than $1,000 per child in tax benefits. Moreover, because of differences in income, family composition, and employment status, nearly half of Blacks and 46 percent of Hispanics receive no or reduced benefits from the CTC because their incomes are too low. By comparison, only 18 percent of White children are in that category.
• Tax Subsidies to Help Low-Income Families Pay for Child Care
  Low-income working families face enormous challenges. Key among them is how to pay for decent child care. The largest federal subsidy is the Child and Dependent Care Tax Credit (CDCTC), a nonrefundable tax credit that offsets up to 35 percent of working parents' child care costs, subject to limits. Though not earmarked specifically for child care, the refundable Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) provide more help to low-income working families. This paper considers options to reform the CDCTC to assist low-income families. Expansions to the refundable tax credits that help families with children are also analyzed.
• A Unified Children's Tax Credit
  We suggest a tax reform that would repeal the EITC, the child tax credit, and the dependent exemption and replace them with a far simpler and often more generous Unified Child Credit (UCC) by 2010. Furthermore, while the dependent exemption is not allowed under the alternative minimum tax (AMT) and nearly 30 million taxpayers will be on the AMT in 2010, the UCC would provide necessary AMT relief in lieu of the dependent exemption and can be the vehicle for bipartisan AMT reform.
• Tax Bracket and Tax Liabilities for Families With Children
  This tax fact shows that almost half of all children (and 80 percent of kids living with single parents) live in households that currently do not pay any federal income tax (net of credits). Thus, unless a new tax credit or an expansion of a tax credit is made refundable, the subsidy cannot help those children, who are presumably the most economically vulnerable.
• Projected Distribution of EITC Claims in 2003
  Enacted in 1975, and adjusted or expanded in the following years, the earned income tax credit costs more than the Temporary Assistance of Needy Families (TANF) program and almost as much as Food Stamps. But who benefits and by how much?
• Effects of Recent Fiscal Policies on Today's Children and Future Generations
  Recent and proposed fiscal policies--the tax cuts, proposals to make them permanent, and the Medicare prescription drug bill--will hurt economic prospects for most of today's children and all future generations. The programs will leave economic growth largely unchanged, but will redistribute resources from future to current generations and, within each generation, from low- and middle-income families toward an affluent minority. These effects exacerbate the impact of underlying federal budget trends and processes that will place significant, imminent pressure on funding for children's programs. An expanded program of investments in children is both feasible and desirable.
• Effects of Recent Fiscal Policies on Children
  Today's children represent the future of the century. This notion that children and future generations should have better living standards than current generations is central to universally shared views of economic progress. This article examines the effects of recent fiscal policies on children and the direct and indirect effects of one set of policies--the tax cuts and the Medicare spending increases that have been proposed and enacted since January 2001--on the long-term economic prospects of today's and tomorrow's youth.
• How the 2001 and 2003 Tax Cuts Affect Hypothetical Families
  How do the 2001 and 2003 tax cuts affect families and tax return filers? What are the tax consequences of having children or being middle-income? The following discussion addresses these questions for an array of families with varying income, number of children, and marital status, for tax year 2003. The table shows the combined amount of tax cut each hypothetical household received from the 2001 and 2003 tax cuts at different levels of adjusted gross income (AGI).
• Recent Expansions to the Child And Dependent Care Tax Credit
  The Child and Dependent Care Tax Credit (CDCTC) provides tax relief to those who are working or are looking for work and are paying for the care of children under age 13, a disabled spouse, or other dependent. The credit equals a percentage of qualified expenses up to a cap. To qualify for the credit, the person must have earned income. This article will focus on recent expansions to the Child and Dependent Care Tax Credit.
• Tax Reform for Families : An Earned Income Child Credit
  [ Brookings Institution] This brief argues that the time is ripe for an integrated credit that combines the Earned Income Tax Credit (EITC) and the CTC into an Earned Income Child Credit (EICC). The proposed EICC simplifies and standardizes the definition of qualifying children and those who may claim them, and indexes the new credit for inflation so that it retains its purchasing power over time. The EICC also provides enhanced benefits to low-income working families and reduces marginal tax rates. One version would cost $6 billion relative to current law (JGTRRA) in calendar year 2003.
• Give the 'Lucky Duckies' a Helping Hand, Too
  [Newsday] The tax bill that President George W. Bush signed into law last week sped up most of the 2001 tax cuts' provisions that were supposed to phase in gradually. Left out, however, were provisions that would have helped low-income working familiesincluding the increase in the refund rate for the child tax credit. Why were low-income working families left out in the cold? It could be because they are "lucky duckies"as the Wall Street Journal calls workers with earnings so meager that they do not owe income tax.
• Tax Entry Thresholds, 2000-2011
  In 1986, a policy decision was made to exempt poor people from the income tax. Increases in the earned income tax credit (EITC) and the introduction of the child tax credit (CTC) have increased the so-called "tax entry threshold" since 1986, and provisions in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) would continue that trend through 2010. The CTC is scheduled to increase in stages to $1,000 over the next decade, and EGTRRA created a new lower tax rate for low-income families. The EITC will also increase gradually for many married couples.
• EITC Reaches More Eligible Families Than TANF, Food Stamps
  The three largest federal income-support programs for low-income household