Abstract
Households with children face burdens that households without children don’t face. Besides food, clothing, shelter and healthcare, childcare can easily run several thousand dollars each year. Historically, US economic and social policies have done little to help families with children. Until 2018, families with children were helped indirectly through tax exemptions for children and some child tax credits. These benefits mainly helped middle-income families in high tax brackets. Things changed with American Rescue Plan Act of 2021, which provided a refundable tax credit to all families with children ($3,600 annually for children under six and $3,000 for those six and older)—even families with no taxable income. This payment is like the child allowance programs that exist in nearly all nations. Our paper examines how the refundable child tax credit affected the economic condition of US households with children, and the impact of this credit on poverty and income inequality in the United States. We conclude with some suggestions for improving the refundable child credit so that it does a better job of helping families with children.
Additional information
Notes on contributors
Steven Pressman
Steven Pressman is at the Department of Economics, New School University, New York, NY, USA.
Robert Haywood Scott
Robert Haywood Scott is at the Department of Economics, Monmouth University, West Long Branch, NJ, USA.