The child tax credit is a ruse

The firebrand congressional Squad leader known on the streets as AOC recently said, "Gee, the child-tax credit just ran out on December 31, and now people are stealing baby formula."  She said this in response to the NYPD announcing the arrest of twelve known shoplifters with a combined 23 outstanding warrants for stealing formula, diapers, and other items they easily resold on the streets. 

It's a false flag — the expired child tax credit has nothing to do with shoplifting in New York City.  There was no cash advance child tax credit in 2020, and shoplifting offenses declined 9% from the prior year.  However, in 2021, when parents were paid by the Biden administration for their progeny, shoplifting in New York increased by 6%.  If AOC were intellectually honest and used her student loan–funded elite eastern college degree in economics, she would see there is no correlation or causation between the CTC and shoplifting.

Here's what is at the heart of the woke push for a permanent cash child tax credit — really, a government-provided cash allowance to procreate.  It's about creating electoral dependency and buying votes.  If leftists really wanted to help children from low-income families, they would be pushing more for government-funded daycare to help working parents and expansion of pre-kindergarten programs for the children of working parents.  It's true that the Biden Build Back Better plan provides $100 billion over the next three years for expanded childcare, but when you actually spread that out and apply it to the eligible 23.6 million children below age five, it's only about $100 per month — hardly enough to pay for child care.

Note the word "working" in the previous paragraph?  The Build Back Better plan applies on an income-based approach, essentially providing benefits to non-working parents and little or none to families earning above the median for their area.  And while one could argue that in the CTC's last COVID incarnation, working parents received it as well, that's just really a return of taxes they have already paid — minus the government overhead to collect taxes and disperse the credits, of course!

Because of this, politicians on both sides of the aisle, like senators like Mitt Romney (R-Utah) and Joe Manchin (D-W.Va.), have either proposed or endorsed a return of the cash child tax credit — but with a work requirement.  These two are hardly shining representatives of their declared political parties, but they are nonetheless dues-paying members.  Not surprisingly, while Democrats and Republicans alike support some form of the child tax credit, they line up along party lines over including a work requirement — Mr. Manchin excepted.

Let's look at the numbers.  Imagine a nuclear family of five with children aged 2, 5, and 11, where neither parent is employed.  Under the expired 2021 cash CTC, they would have received $10,000 from the government.  But if both parents worked full-time, even at minimum-wage jobs, the total of their earnings plus the CTC would be over $40,000 — hardly a fortune, but that's 30% more than what the government defines as the poverty level for a family of five.  For a short period of time, their added unemployment benefits would have equaled their working incomes, but that's a six-month solution at best.

Another whopper we've been told is that without the cash CTC, more children will live in poverty.  That simply isn't true.  In 2018 — well before the COVID economy and the cash child tax credit — the Census Bureau reported that 16.2 percent of children were living in poverty.  Since the expiration of the cash CTC in December, this year to date — basically one month of 2022 data — the child poverty rate is estimated to be 17%.  True, that's an increase, but it's a marginal one, and only for one month of data. 

In a recent working paper, a group of economists at the University of Chicago stated the following: "deep child poverty would not fall at all with the CTC expansion."  Additionally, in that same report, they estimated that the return of the cash CTC would disincentivize work and result in 1.5 million people quitting their jobs.  To be fair, this finding is contradicted in a report issued by the National Academy of Sciences, which estimated a negligible effect on employment.  However, the Academy did respond to the Chicago report by saying in part, "We don't think we were wrong in our assessment, although we are open to the possibility that the employment effects may be a bit bigger than we estimated."  Really?

There's no simple answer here.  Nobody, not even cold-blooded economists, want children living in poverty.  But paying low-income families to have more children doesn't seem even remotely rational.  In the meantime, expect the woke crowd to continue waving false flags around the advance cash child tax credit.  Remember, it was AOC who said during her campaign, "We need to kick luxury real estate lobbyists to the curb and defend working people's way of life."  Now living in a luxury apartment herself, she says, "Luxury should not be a luxury."

Kevin Cochrane is an economist who teaches economics and business at Colorado Mesa University.  He previously taught at the University of California and was a senior national banking executive.

Image via Pixabay.

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