Working Papers

Summary

“Real‐​Time Poverty, Material Well‐​Being, and the Child Tax Credit,” by Jeehoon Han, Bruce D. Meyer, and James X. Sullivan. NBER Working Paper no. 30371, August 2022.Federal support for poor children has shifted over time from cash transfers that penalized work (the Aid to Families with Dependent Children program, 1935–1996) to tax credits offered only to those who work. This switch was proposed in a 1991 report by a bipartisan National Commission on Children, which recommended a $1,000 refundable credit for all children through age 18. A version of the credit was proposed by Republicans in their 1994 Contract with American and by President Bill Clinton in 1995. It was eventually enacted in 1997 as a $500‐​per‐​child non‐​refundable credit, meaning that families that paid little in income tax couldn’t take full advantage of the amount. In 2001 Congress increased the credit to $1,000 per child and made it partly refundable. The 2017 Tax Cuts and Jobs Act increased the credit to $2,000 per child.

Creators/Authors

Peter Van Doren
Senior Fellow and Editor of Regulation