Mitt Romney's Child Tax Credit Rates Careful Consideration
(AP Photo/Manuel Balce Ceneta)
Mitt Romney's Child Tax Credit Rates Careful Consideration
(AP Photo/Manuel Balce Ceneta)
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We live in a time where “bold reform” is a phrase usually reserved for policy proposals that are only “bold” because everyone else knows they won’t work. From wealth taxes to massive federal minimum wage hikes toemployee head taxes and more, it’s usually only proponents of horrendous ideas that get to tout themselves as “bold” because of how boldly they ignore all the experts. Yet when it comes to bold proposals that actually succeed in advancing the debate, Senator Mitt Romney’s plan to comprehensively reform how the social safety net addresses child poverty stands out.

That’s because Romney’s proposal gets at a major problem in our welfare system — the mishmash of overlapping and duplicative programs that have been tacked on over time, often with only a passing regard for how it all comes together. His proposal aims to consolidate and eliminate existing programs in favor of something more effective and be responsibly deficit-neutral. Though the proposal isn’t perfect, it’s certainly the type of “bold reform” proposal that we could use more of as a part of debates over improving federal policy.

Romney’s proposal would transform the current annual Child Tax Credit (CTC), recently doubled by the Tax Cuts and Jobs Act to max out at $2,000 per child per year, into a monthly child allowance. This new benefit would be worth $350 per month ($4,200 per year) per child between the ages of 0 and 5, and $250 per month ($3,000) per child between the ages of 6 and 17. The maximum monthly benefit would be $1,250 per month per family, and would begin to phase out at the current CTC adjusted gross income limits of $200,000 for single filers and $400,000 for married filers.

Due to this expanded child allowance, other programs which aim to accomplish similar goals could be eliminated. The Child and Dependent Care Tax Credit, which allows a deduction for dependent expenses, would be eliminated, as would the head of household filing status and the Temporary Assistance for Needy Families (TANF) grant. The Earned Income Tax Credit (EITC) would be simplified and changed to a maximum benefit of $1,000 for single filers and $2,000 for married filers.

Though this is a great deal of existing programs to eliminate, it makes sense to address them. TANF has beencriticized as inefficient and ineffective even by progressives, the head of household filing status is confusing and often leads to taxpayers filing incorrectly, and the EITC suffers from improper paymentscomplexity, and some negative incentives.

And in place of the existing system, Romney’s proposal offers a great deal of advantages. The Niskanen Center estimates that Romney’s proposed system would reduce child poverty by a third, and cut deep child poverty in half. And by paying out its benefits monthly instead of annually, it would offer families greater flexibility to respond to sudden financial challenges, particularly at a time when many Americans don’t have much in the way of rainy day funds.

The Romney plan’s final pay-for is also a good unto itself. Romney would finally eliminate the state and local tax (SALT) deduction, a policy that almost exclusively benefits wealthy families that obscures the cost of taxes for high-tax states. This would encourage more accountability for states passing ever-higher taxes in part by assuring their taxpayers that they can simply write off the expense at the federal level.

There are potential issues with Romney’s plan, to be sure, such as the effects it could have on incentives to work. But as he continues to develop his proposal, he deserves to be commended for offering Americans a productive contribution to ongoing welfare reform conversations. It’s rare to see a proposal that would substantially improve Americans’ lives without placing the country further into debt. Whatever the ultimate result of Romney’s legislation, the country could use more truly bold ideas like his.

Andrew Wilford is a policy analyst with the National Taxpayers Union Foundation, a nonprofit dedicated to tax policy research and education at all levels of government. 

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