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Op/ed: Why We Shouldn’t Bemoan the Loss of the Expanded Child Tax Credit

Much of the Money Went to Higher-Income Families or was Spent Improperly, UMD Researchers Argue

By Douglas J. Besharov and Douglas M. Call

kids sit on sign protesting loss of expanded child tax credit outside White House

Children of advocates of the expanded child tax credit sit on a sign supporting the policy outside the White House in September 2022. In a new essay, UMD public policy researchers argue that the now-defunct credit went to many people who didn't need it.

Photo by Larry French/Getty Images for SKDK

A new Census Bureau report that found child poverty doubled in 2022 has riled supporters of the COVID-related child tax credit that Congress allowed to expire last year. The two must be linked, they suggested.

But in a new essay in The Washington Post, University of Maryland School of Public Policy Professor Douglas J. Besharov, director of the school’s Welfare Reform Academy, and Lecturer Douglas M. Call, deputy director of the academy, called out the credit’s wastefulness and recommended an anti-poverty plan with a reasonable income cap on eligibility.

The conventional wisdom is wrong.

The expanded child tax credit, enacted in early 2021 as part of President Biden’s American Rescue Plan, was a perversely inefficient way to fight poverty. It made about 96% of all American families with children—meaning children of affluent as well as of nonworking parents—eligible for grants of as much as $3,600 each, based on the children’s age and parents’ income. Of the $93 billion in payments in 2021, $40 billion went to families with annual incomes of more than $60,000. And, because of complicated and easily abused rules, annual improper payments could be about 16% of the total—or almost $15 billion.

Read the rest in The Washington Post.



Schools & Departments:

School of Public Policy

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