WASHINGTON, D.C. December 16, 2019—The Niskanen Center applauds the bipartisan refundable Child Tax Credit proposal released yesterday by Senators Mitt Romney (R-UT) and Michael Bennet (D-CO). A fully refundable Child Tax Credit is a highly cost-effective approach to both reducing child poverty in America and promoting strong and stable families. 

Conservative support for a fully refundable Child Tax Credit is a long time coming,” says Samuel Hammond, the Niskanen Center’s director of poverty and welfare policy. “A fully refundable CTC would support larger and more traditional families, respect the diversity of family needs, and harnesses local knowledge and subsidiarity.” 

The rising cost of raising a child in recent years has been accompanied by grim statistics about the health of working class families, as well as the realization that millions of Americans are falling short of their familial goals. At the same time, the United States has the lowest expenditure on cash-based family benefits in the OECD. This low hanging fruit may help to explain why studies of refundable tax credits find they more than pay for themselves through improved health and educational outcomes for children.

Building on the benefits of the Child Tax Credit while extending them to poorest children will be essential to ensuring working families around the country have the resources they need to raise the next generation. The Romney-Bennet proposal does this by creating a new and larger Young Child Tax Credit for children under 6, and by making a substantial portion of both credits fully refundable.

At an estimated cost of $24 billion per year, the Romney-Bennet proposal is significantly smaller than Democratic proposals like the American Family Act. The Niskanen Center nonetheless estimates that the Romney-Bennet reforms to the Child Tax Credit would lift 1.6 million children and 1.1 million adults out of poverty.

“Child benefits like the Child Tax Credit have been shown to improve household stability, improve maternal mental health, and reduce abortion rates among young and financially insecure new mothers,” Hammond says “These considerations are why conservative policymakers around the world have successfully led on family and child benefits, and is no doubt why a strong conservative like Senator Romney has done so now.”

The Tax Cuts and Jobs Act of 2017 was passed in haste and along party lines, pushing the inevitable need for fixes and technical corrections to a future Congress. Now that a divided Congress is negotiating such a legislative package, bipartisanship has become a necessity.

“The Romney-Bennet proposal is less a compromise than a case of convergence,” notes Hammond. “A fully refundable Child Tax Credit speaks to the values of the anti-poverty left and pro-family right simultaneously, and therefore represents a strong foundation for much needed, bipartisan fixes to our tax code.”

The Niskanen Center is a 501(c)(3) advocacy organization established in 2014 that works to change public policy through direct engagement in the policymaking process.