Joe Biden has plans for a major child tax credit expansion.
According to recent reports, his administration is calling on Congress to pass legislation that would have the IRS distribute monthly checks directly to parents — $300 ($3,600 annual) for every child younger than six, and $250 for every child age 6 to 17.
Republicans seem likely to oppose this proposal on a number of grounds.
First, this legislation would add to the existing child tax credit, a $2,000 per child annual partially refundable tax credit, and the Earned Income Tax Credit, which provides additional relief for low-income working individuals and families, predominantly for those with children.
Second, this proposal isn’t likely to have a cheap price tag. The current child tax credit “cost” the federal government $118 billion in 2019.
Going off a rough estimate, Biden’s proposed expansion is likely to be almost twice that amount. After the fight over the COVID-19 stimulus checks, it’s hard to imagine most Republicans jumping at the opportunity to spend more money.
Third, Biden’s proposal would be fully refundable, meaning the monthly checks would even go to families who don’t pay income tax. Republicans are likely to attack this policy as a strong disincentive to work — and there’s plenty of research to suggest they might be right.
But while Biden’s proposal is far from perfect, and the delivery mechanism is clunky and potentially problematic, it is still likely to be extremely popular with the electorate at large, specifically with working-class families who will benefit the most from this type of expansion — and who also happen to be a critical voting constituency for Republicans.
So how are Republicans, who continue to rhetorically stake claim to the working class as a critical part of their political coalition, going to respond? Are they going to break out the national debt clocks and party like it’s 2011?
Obviously, blanket opposition won’t cut it. Republicans can’t just cede pro-family economic policy to the Democrats.
They need to be competing in this space.
Republicans have to recognize that their policies must address the conditions of not simply corporations, but also of the working families that keep these businesses running (and keep the Republican Party relevant). If the GOP does decide to oppose the specific contours of Biden’s proposal, the party will still need to provide a comparably ambitious plan if it hopes to address the ongoing family crisis.
Let’s face the facts: families really do pay a disproportionate share of taxes relative to their cost of living, and especially relative to their benefit to society. As this writer has argued here before, our tax code heavily favors capital formation over labor formation — that is, having and raising children.
Our country has spent decades implementing pro-growth policies for capital formation. Now we need to do the same thing for families because the American family is in serious trouble.
Here are more concerning facts: America’s birth rate continues to decrease every year, and we’re nowhere close to replacement level for the current population. As of 2017, the fertility rate was 16 percent below replacement, with only adults in South Dakota and Utah having enough children to replace themselves.
Shockingly, even after various COVID-19 lockdowns forced couples to stay home with each other for almost a year, our birth rate seems to have sunk even further. This is a disaster in the making.
Though the decline can probably be attributed to both cultural and economic factors, we should take a harder look at what we can control: incentives and disincentives that stem from government policy. Our goal ought to be to level the playing field and at least give preference to family formation in the same way we cheer capital formation.
Families and the children they create, feed, clothe, educate, and raise not only constitute the economy but are the purpose of an economy. The economy is good if and only if it is benefiting people, and nothing benefits a person more than a strong family.
And, of course, without families, there is no one for the economy to benefit at all.
Republicans aren’t likely to support President Biden’s proposal, but they should counter with an ambitious pro-family economic plan of their own. Here are a few options:
Expand the Child Tax Credit
While it is true that the Tax Cuts and Jobs Act increased the child tax credit by $1,000 per child, it also eliminated personal exemptions, so the net impact on families wasn’t as significant as advertised. Instead of supporting Biden’s plan, which would be temporary, Republicans could argue for a permanent child tax credit expansion for working-class families — $3,600 per child under six, and $3,000 per child ages six to 17.
This would immediately be cheaper than Biden’s proposal, which would amount to an eye-popping $5,600 and $5,000 per year, respectively. To cut costs even further, Republicans could propose means testing the credit above a certain income level — do millionaires really need another tax benefit?
Reform the Earned Income Tax Credit
The Earned Income Tax Credit is generally regarded by Republicans as a valuable benefit for low-income families, but it is rife with problems, including fraud and erroneous payments. Additionally, there are serious issues with its distribution curve — it arguably disincentivizes having more than two children.
A number of Republicans, including Missouri Republican Senator Josh Hawley and Florida Republican Senator Marco Rubio, have already released proposals that would address many of these problems, while also maintaining a strong incentive for work. A substantive proposal to amend the Earned Income Tax Credit, or even expand it — potentially while combining it with the Child Tax Credit — could be a political winner for Republicans.
Pass Budget-Neutral Paid Family Leave
Pro-family Republicans worried about the deficit should definitely take a look at Louisiana Republican Senator Bill Cassidy’s budget-neutral paid family leave bill. The Advancing Support for Working Families Act allows new parents to take a $5,000 cash advance on their child tax credit at the time of their child’s birth or adoption, which would be paid back over 10 years at zero-percent interest.
This costs the federal government next to nothing — the debt would be forgiven upon the death of the parent or child — and it gives working-class families needed support at a time of financial difficulty. Promoting this bill as a fiscally conservative alternative to Biden’s plan is a no-brainer.
Create New Educational Tax Deductions for Families
Another option for Republicans is to promote educational choice and take aim at the teachers’ unions that are destroying the failing public school system. Texas Republican Senator Ted Cruz introduced a bill called the Student Empowerment Act, which would expand tax-advantaged 529 plans to include K-12 education expenses for public, private, and religious schools, as well as for homeschoolers.
Alternately, Republicans could skip the middleman and go even more aggressive by making all K-12 education expenses tax-deductible.
The political case for promoting these pro-family proposals is crystal clear. The Republican Party needs working families on its side to be successful electorally. The Democrats know this — seemingly more so than the Republicans — and are making a play to buy their support.
It would behoove the GOP to counter Biden’s untenable pro-family economic proposal with viable options of their own.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.