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Studies show that more than 20% of American children live below the poverty line. This is a higher percentage than in Russia, a country with less than half America’s per-capita GDP. Last week, Hillary Clinton released a major part of her plan to fix the problem. The Democratic nominee wants to double the current Child Tax Credit, which would provide families with tax breaks of $2,000 per child under 5 years old. She also promises to lower the income threshold for those eligible for the credit. As it stands, only those earning more than $3,000 can claim the credit, but under her plan it would apply after the first dollar earned.
Hillary Clinton has touted her plan to expand and increase the Child Tax Credit. The credits already in place enjoy bipartisan support and are believed to help millions of Americans escape poverty. Clinton says her plan would benefit “as many as 15 million children.” This would boost middle-class families as well as those making the lowest incomes. Clinton notes that, beyond the immediate cash, “families that receive refundable credits like the Child Tax Credit are more likely to be in the labor force and contribute to the economy.” Like the current system, Clinton’s proposal will not apply to the upper class. The plan is part of her broader platform to create a fairer economy. It will be fully paid for, according to the Clinton campaign, by tax hikes on Wall Street, wealthy households, and large corporations.
Alex Brill is a scholar at the American Enterprise Institute, a conservative think tank. Brill believes that despite the bipartisan support for child tax credits, which have continued to increase since being introduced in the 1990s, there is reason to consider their downsides. The credits cost billions of dollars every year, adding to America’s huge annual deficit and overall debt. Hillary Clinton’s proposal, he notes, would cost $190 billion during its ten-year window. This represents an increase of around 40% over the current system. Meanwhile, Brill argues the credits “do little or nothing” to boost economic growth. He believes that, unlike other targeted tax breaks, child credits do not incentivize work. At the same time, they add an incentive to have children, while increasing the relative burden among those who remain childless or have fewer children.  
Jane Waldfogel is a professor of social work at Columbia University. She is one of nine experts set to publish an article proposing an entirely new means of fighting child poverty. Waldfogel and her colleagues want to replace child tax credits with a universal income for every child. The plan would provide an unconditional monthly salary of $250 for all children, regardless of their family’s total income. Waldfogel believes her team’s proposal would remove the problem of discouraging work while reducing child poverty by around 40%.  It would largely be paid for by eliminating the current system of credits and deductions. Similar versions of the idea are already in place in numerous advanced countries, and they have had support from economists of all stripes, including Milton Friedman, perhaps the most venerated conservative thinker of the previous century.
Further Reading: New York Times / AEI / Politico
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Clinton photo from Reuters. Brill from AEI. Waldfogel from Columbia.
Copyright © 2016 Parallax News, All rights reserved.


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