Who Benefits from the Child Tax Credit?

32 Pages Posted: 14 Oct 2020 Last revised: 6 May 2023

See all articles by Jacob Goldin

Jacob Goldin

Stanford Law School

Katherine Michelmore

University of Michigan at Ann Arbor; Syracuse University

Multiple version iconThere are 2 versions of this paper

Date Written: October 2020

Abstract

In recent years, the Child Tax Credit (CTC) has provided a cash transfer of up to $2,000 per child under age 17 to millions of families in the United States. Using the Current Population Survey, we examine the aggregate effects and distributional implications of the rules governing the credit. We focus on the rules that were in place for years prior to 2021 and that are currently scheduled to apply for years beginning in 2022. While approximately 90% of children benefit to at least some degree from the CTC, we document striking disparities in eligibility and benefits by income and race. The vast majority of children living in households in the bottom decile of the national income distribution are completely ineligible for the CTC and the majority of filers in the bottom thirty percent are eligible only for a partial credit. In contrast, virtually all children living in households in the top half of the income distribution qualify for the full credit amount. Approximately three-quarters of white, non-Hispanic and Asian children are eligible for the full CTC, compared to only about half of Black and Hispanic children. We use our results to estimate the distributional effects of a range of reforms to the CTC eligibility rules. Our results suggest that reforming the credit to include a larger share of children would more evenly distribute the credit’s benefits across children of different races and incomes.

Suggested Citation

Goldin, Jacob and Michelmore, Katherine, Who Benefits from the Child Tax Credit? (October 2020). NBER Working Paper No. w27940, Available at SSRN: https://ssrn.com/abstract=3709631

Jacob Goldin (Contact Author)

Stanford Law School ( email )

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Stanford, CA 94305-8610
United States

Katherine Michelmore

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

Syracuse University ( email )

900 S. Crouse Avenue
Syracuse, NY 13244-2130
United States

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