US Presidential Election Hot Issue: Child Tax Credit
Harris and Trump Both Promise Benefit Expansion
163 Trillion Won Annual Tax Investment, but Effectiveness Questioned
"Support Low-Income Households Rather Than Broad Application" Voices
Ahead of the U.S. presidential election this November, both the Kamala Harris and Donald Trump camps have proposed expanding the child tax credit as part of their platforms. However, academia is raising doubts about whether expanding the child tax credit will truly benefit low-income families. There is a growing opinion that, to effectively address poverty among low-income households, it is more positive to narrow the target and provide focused support rather than broadly expanding the child tax credit.
The Wall Street Journal (WSJ) recently reported that academic analyses are pouring in, criticizing the child tax credit proposals of the two U.S. presidential candidates as excessively broad policies that are not the best solution for supporting families who genuinely need assistance.
The Harris camp has promised a tax credit of $6,000 (approximately 8.03 million KRW) for newborns in the relevant year and an annual tax credit of $3,600 for children under six years old. Additionally, they plan to allow an annual tax credit of $3,600 per child until the child turns 17. The Trump camp announced plans to provide an annual tax credit of $5,000 per child without any income restrictions.
The U.S. government introduced the child tax credit system in 1997 to reduce the child-rearing cost burden on middle-class parents. Initially, the policy provided a tax credit of $400 per child under 17, but the support amount has since increased, and through tax law revisions during the Trump administration, most American families now benefit from this credit. Currently, married couples earning above minimum wage but less than $400,000 receive a tax credit of $2,000 (approximately 2.67 million KRW) per child.
Based on this, the U.S. government spent $122 billion (approximately 163.4 trillion KRW) on child tax credit support last year alone. Tax reduction benefits accounted for $74 billion, and refundable tax credit benefits totaled $48 billion. The Biden administration has attempted to expand these benefits multiple times, and the Republican Party also recognizes the necessity, but given the significant fiscal burden of such policies, passing related legislation remains challenging.
Above all, opinions differ on the effectiveness of the child tax credit policy. Academia argues that if the policy goal is to alleviate the economic burden of low-income households, broadly applied child income tax credits are inappropriate. Hillary Hoynes, a professor at UC Berkeley, stated, "There is evidence that increasing support through tax credits or other policies for low-income households reduces poverty and has long-term positive effects on children," citing increases in high school graduation rates, college enrollment rates, higher income in young adulthood, and reduced prevalence of chronic diseases.
In fact, in 2021, the Joe Biden administration significantly increased child tax credit benefits for one year to support middle-class households whose incomes sharply declined due to the pandemic. The tax credit amount was expanded to $3,600 for children under six and $3,000 for children aged 6 to 17. WSJ introduced clear evidence that poverty-stricken families were able to secure more cash and spend it on their children as a result.
Although high-income families also receive child tax credit benefits, experts point out that there is no clear evidence that this improves their household economy. Robert Greenstein, a researcher at the Brookings Institution, a U.S. think tank, said, "The income threshold for eligibility for child tax credit benefits is unnecessarily high," adding, "I have never seen research showing that a family earning $300,000 a year receiving thousands of dollars experiences a significant improvement in their economic situation." He criticized these measures as "political."
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