Famed free-market economist Milton Friedman once quipped that: “I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.” Today, many Americans, beset by the twin troubles of Bidenomics and rampant inflation, are echoing Friedman’s call for tax relief and are looking to the nation’s leaders to deliver it.
There is no shortage of opportunities for Washington D.C. policymakers to lighten the load either. They can reduce (or preferably eliminate) the individual income tax. Or lower payroll taxes. Or they can even re-up the Child Tax Credit (CTC).
In 2017, a key piece of legislation championed by the Trump administration, the Tax Cuts and Jobs Act (TCJA), doubled the maximum CTC from $1,000 per child to $2,000 per child whilst “ma[king] the credit available to more middle-income families.” At the time, this change was reported to be “the biggest increase in the child tax credit in history.” And, arguably, it helped to improve the fortunes of most everyone, as evidenced by the general economic boom of the period.
Earlier this year, the Wall Street Journal published an article examining the reasons driving America’s declining birth rate. Since 2007, the number of babies born in the U.S. has declined 15%. This decline is not due to a lack of interest in having children. Rather, economic concerns are among the top reasons cited by young adults as to why they were delaying having children or not having as many children as they would like. There is a growing perception among Americans that having a family is becoming a luxury only the most well-off can afford.
Extending the CTC is one way Congress can help alleviate this concern and promote family formation. As currently in effect, the CTC is set to expire in 2025, meaning working families will see their tax bills go up. As a result, many may defer their dream of having children—unless Washington, D.C. policymakers can come together to do something about it.
Negotiations are currently underway to extend the CTC as-is, but a deal is far from certain. One senior Republican lawmaker recently speculated that: “All parties are aware that a December timeline is difficult, but that there is a window early next year.”
That bit of news is mildly encouraging, but we’re at a point in time where American families need certainty and significance. They need Republicans and Democrats alike to come together to preserve the TCJA version of the CTC. And soon.
To be clear, the CTC is not a handout. It’s pro-family tax policy, wherein society recognizes the difficulty of raising children and takes a proactive step to alleviate a small portion of the overall burden in service of its future. For many, this small inducement can have a big impact.
Earlier this year, research conducted by Lending Tree estimated that: “Families are projected to spend $237,482 over 18 years to raise a child.” Mind you, those costs could surged higher if the cost of government continues to grow and inflation doesn’t abate. Even still, that nearly quarter-million dollar expense is large enough to cause some married couple to balk at having kids. That’s an outcome that, if widespread, will cost society untold sums in the future, due to an absence of people, productivity, and potential.
To prevent such an outcome, Congress should, at a minimum, find agreement on renewing the TCJA version of the CTC. This will, at least, maintain the status quo and prevent unnecessary hardship for working families.
Over the long-term, our nation’s leaders must get serious about putting Americans’ financial interests first. That means challenging the old, progressive systems that now typify the Tax Code and restoring fiscal sanity through balanced budgets, spending limits, and the like. And, of course, it should also include a heavy dose of tax cuts, of every type, for any reason, wherever possible