Permanent expanded Child Tax Credit would offer huge return on investment – NBER
A working paper issued by the National Bureau of Economic Research (NBER) this month says making the expanded Child Tax Credit (CTC) permanent would bring benefits many times the size of the investment required.
As part of the American Rescue Plan, a covid-19 relief bill signed into law in early 2021, qualifying families received monthly payments of up to $300 per child between July and December.
Households can also claim CTC money relating to the other half of 2021 when they file their federal tax returns, but the expiry of the scheme at the end of December means there will be no more monthly payments after that.
Authored by Irwin Garfinkel, Laurel Sariscsany, Elizabeth Ananat, Sophie M. Collyer, Robert Paul Hartley, Buyi Wang and Christopher Wimer, the NBER working paper entitled ‘The Benefits and Costs of a U.S. Child Allowance’ found that a permanently-expanded CTC would yield a ten-fold return for the American economy.
“Our estimates indicate that making that expansion permanent would cost $97 billion per year and generate social benefits with net present value of $982 billion per year,” the authors said.
Recent research by the Columbia University Center on Poverty and Social Policy indicated that 3.4 million children have been pushed into poverty since the enhanced CTC came to an end.
See also: End of expanded Child Tax Credit impacts millions of US children