This was a big week for the Child Tax Credit. It started with Ivanka Trump making her first sales pitch in support of pro-family tax reform at a meeting on Wednesday, hosted by Grover Norquist and Americans for Tax Reform. The meeting included comments from Sen. Mike Lee and Rep. David Schweikert, and was attended by representatives from 25 conservative groups. As the Washington Examiner reported,
Trump, who was first to deliver remarks, spoke with obvious passion for the cause — using statistics to illustrate how high the costs of childrearing can be — and indicated she hopes the existing child tax credit will “at least” double. “This administration is pushing for the largest child tax credit possible,” Trump revealed, adding moments later that she “would also like to see it be made refundable against payroll taxes, so that more lower income families can fully benefit from the credit.”
That the Trump administration is making the CTC such a strong priority is fantastic news for anti-poverty advocates. “Refundable against payroll taxes” means the CTC will finally have first-dollar refundability, effectively eliminating the $3,000 minimum earning requirement, and putting cash into the pockets of low income households. An earlier version of the Lee-Rubio plan was estimated by the Tax Foundation to increase the after-tax income of the lowest income decile by 44.2 percent, and 55.9 percent with dynamic scoring. So while obviously short of a true child allowance, first-dollar refundability combined with a credit doubling is nonetheless a highly progressive change to the tax code.
The day after the event, the Family Research Council and Ralph Reed’s Faith and Freedom Coalition, two highly consequential social conservative organizations, released statements endorsing a CTC expansion.
We look forward to promoting #TaxReform and increasing the child tax credit with @IvankaTrump. @WashTimes https://t.co/gRbrOzgUGT
— Faith & Freedom (@FaithandFreedom) September 6, 2017
As sociologist and Child Tax Credit historian Joshua McCabe pointed out on Twitter and in a new op-ed for The Hill, the endorsement of the pro-family pillar within the Republican Party is a very strong signal in favor of the CTC’s place in tax reform. Both Reed and the FRC were architects of the original CTC enacted in 1997, and were essential in pushing Congressional Republicans to make “the child tax credit the ‘crown jewel’ of their famous Contract with America.”
But that doesn’t make the CTC expansion a fait accompli. While the administration’s position is to double the CTC from $1,000 to $2,000 and make it payroll refundable, they are in a tug of war with Wall Street and conservative supply-siders who want to squeeze every last dollar of forgone tax revenue into rate reductions. So unless all hands are on deck to push for the First Daughter’s first-best proposal, we could see the credit size and degree of refundability begin to slide back, crowded out by other priorities. In a worse case scenario, the CTC could be expanded by say, $500, without changing refundability at all, and paid for by eliminating the dependent exemption. As Ramesh Ponnuru pointed out, that sort of “bait and switch” would allow the promise of a CTC expansion to technically be kept, while leaving most families worse off on net.
Fortunately, compared to Wall Street, the pro-family groups appear to be far better coordinated on exactly what they are asking to get from tax reform. One wishes that more anti-poverty organizations, which have so far been playing defense against an austerity-minded Congress, realize just how much is at stake in tax reform, and begin to step up in support of the administration’s CTC proposal in greater numbers.