BUILDING A STRONGER FOUNDATION FOR AMERICAN FAMILIES - Options for Child Tax Credit Reform

The provisions increasing the generosity of the credit and eliminating the earnings requirement were the most important drivers of this reduction.2 The main lesson is that future proposals should continue to focus on boosting benefits for the lowest-income families. [...] Fisher, The effect of marriage tax penalties and subsidies on marital status; Michelmore, The earned income tax credit and union forma- tion: The impact of expected spouse earnings; James Alm, Sebastian Leguizamon, and Susane Leguizamon, “Race, ethnicity, and taxation of the family: The many shades of the marriage penalty/bonus,” National Tax Journal 76, No. [...] Various experts have recommended iterations of this proposal, including the 2005 President’s Advisory Panel on Federal Tax Reform and the 2008 report of the Taxpayer Advocate.21 The distributional impact would depend on the value and structure of the expanded CTC. [...] The CDCTC is essentially off-limits to the parents, married or single, who are least prepared for the cost of child care and who have the most to gain from access to the workforce. [...] The most straightforward way to address each of these issues is to reduce the value of the EITC, increase the phaseout threshold, and reduce phaseout rates in conjunction with an expansion of the CTC.