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Child Tax Credit

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"Child Tax Credit"

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As of January 1, households earning at least $12,500 a year will be eligible for the Child Tax Credit. And one proposal that seems to be in the Obama team’s plan for economic stimulus is to lower that threshold to $3,000. That would offer about $18 billion worth of high-multiplier stimulus, because the beneficiaries would be poor families with a high propensity to consume the marginal dollar rather than wealthy households likely to use extra money to try to pick up some bargain investments. But this is a good idea that can be made better by dropping the threshold all the way down to $0. That would add about $1.7 billion per year in extra costs, so $3.4 billion over the forecast two-year life of the stimulus, and help about 800,000 additional children. And of course when it comes to stimulus, finding things to spend money on is the name of the game. This is high-multiplier stuff, so it’s worth doing.

Beyond stimulus, it’s an opportunity to do something about our scandalously high child poverty rate. A brief reminder:

childpoverty.png

So there we go. Bring the threshold to zero.

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