Defending the Child Credit

by Ramesh Ponnuru

Scott Lincicome makes several arguments against Senator Mike Lee’s proposal to expand the tax credit for children. 1) The revenue lost could be used to cut other taxes in a way that would do more to promote economic growth. 2) There are other ways to offset the entitlement state’s bias against families, such as eliminating the payroll tax. 3) It’s social engineering.

If the premise in (2) is correct, then (3) and (1) should fall. If we concede that current government policy includes a bias against child-rearing–because it socializes the return to but not the cost of that endeavor–then correcting that bias isn’t social engineering; it’s a reduction in the amount of social engineering the federal government already does. And conservative tax policy ought to aim at reducing the distortions and costs the government imposes on our society, not just those distortions and costs that directly affect economic growth. (If there’s a good argument against that last sentence, I’d love to hear it; Lincicome doesn’t make it.)

As for those other means of reducing the anti-family bias of the code, I’m open to some of them–although Lincicome’s favored one, eliminating the payroll tax, would do nothing to achieve the goal. Fund Social Security and Medicare through present and future income taxes, and people would still benefit from other people’s child-rearing whether or not they engaged in any themselves. A per-kid reduction in taxes, which Lincicome also mentions, would offset the government’s bias, but it’s not more straightforward and simple than just augmenting the existing per-child credit.

Lincicome says that it would make more sense to let people keep their income rather than giving them some of it back once a year. But it’s the easiest thing in the world for the child credit to show up in increased take-home pay in each and every paycheck. Expand the credit, and parents could reduce tax withholding.

Two more points: You’re more likely to get pro-growth reforms if they’re coupled with something as popular as an expanded child credit. And Lincicome is right that an expanded credit wouldn’t be large enough to get people to have kids they don’t want. It might, however, help people who want kids to have them.

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