Yet Another Case for an Expanded Child Creit

Lilian V. Faulhaber, a Boston University law professor, recently a number of ways in which the tax code disadvantages working mothers. She ends with a discussion of the child and dependent care credit, the maximum value of which is $1,050 for one child or $2,100 for two or more, an amount that quickly decreases as income rises to $600 and $1,200 respectively. Faulhaber observes that a household earning $50,000 can only reduce its taxes by $600 or $1,200 under the credit. For context, the median household income for U.S.-born families with children was $59,300 in 2011, and the median household income for immigrant families was $47,000 that same year. (It is interesting, incidentally, to see how the gap between U.S.-born families and immigrant families varies across U.S. states. In most states, as you might expect, median household income for U.S.-born families exceeds that of immigrant families, sometimes by a substantial margin. Yet in Virginia, West Virginia, Vermont, Ohio, New Hampshire, Mississippi, Michigan, Maine, Louisiana, Kentucky, and Hawaii, immigrant families have a higher median household income than U.S.-born families.)

Faulhaber proposes a few different strategies for overhauling the child and dependent care credit:

(1) Decreasing overall tax rates, an approach that won’t necessarily benefit second-earners, a disproportionately large share of whom are working mothers;

(2) addressing the high cost of child care by providing it directly or subsidizing it more generously;

(3) or increasing the child and dependent care credit so that it covers a large share of the total child care costs, or treating child care as a business deduction. 

Robert Stein’s solution is quite different: rather than expand the child and dependent care credit, he proposes folding it into a larger child credit by replacing it and the existing dependent exemption for children, the child credit, and the adoption credit with a new $4,000 child credit that can be used to offset both income and payroll taxes. This approach has the potential to be far more progressive than Faulhaber’s proposal, as it reduces payroll tax liability as well as income tax liability, and it doesn’t disfavor families that rely on informal rather than formal child care. 

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

Most Popular

Law & the Courts

Obstruction Confusions

In his Lawfare critique of one of my several columns about the purported obstruction case against President Trump, Gabriel Schoenfeld loses me — as I suspect he will lose others — when he says of himself, “I do not think I am Trump-deranged.” Gabe graciously expresses fondness for me, and the feeling is ... Read More
Politics & Policy

Students’ Anti-Gun Views

Are children innocents or are they leaders? Are teenagers fully autonomous decision-makers, or are they lumps of mental clay, still being molded by unfolding brain development? The Left seems to have a particularly hard time deciding these days. Take, for example, the high-school students from Parkland, ... Read More
PC Culture

Kill Chic

We live in a society in which gratuitous violence is the trademark of video games, movies, and popular music. Kill this, shoot that in repugnant detail becomes a race to the visual and spoken bottom. We have gone from Sam Peckinpah’s realistic portrayal of violent death to a gory ritual of metal ripping ... Read More
Elections

Romney Is a Misfit for America

Mitt’s back. The former governor of Massachusetts and occasional native son of Michigan has a new persona: Mr. Utah. He’s going to bring Utah conservatism to the whole Republican party and to the country at large. Wholesome, efficient, industrious, faithful. “Utah has a lot to teach the politicians in ... Read More
Law & the Courts

What the Second Amendment Means Today

The horrifying school massacre in Parkland, Fla., has prompted another national debate about guns. Unfortunately, it seems that these conversations are never terribly constructive — they are too often dominated by screeching extremists on both sides of the aisle and armchair pundits who offer sweeping opinions ... Read More
U.S.

Fire the FBI Chief

American government is supposed to look and sound like George Washington. What it actually looks and sounds like is Henry Hill from Goodfellas: bad suit, hand out, intoning the eternal mantra: “F*** you, pay me.” American government mostly works by interposition, standing between us, the free people at ... Read More
Film & TV

Black Panther’s Circle of Hype

The Marvel Cinematic Universe (MCU) first infantilizes its audience, then banalizes it, and, finally, controls it through marketing. This commercial strategy, geared toward adolescents of all ages, resembles the Democratic party’s political manipulation of black Americans, targeting that audience through its ... Read More