In a 2012 column dissecting why our country’s fertility plunge is a big deal, Ross Douthat, a columnist for the New York Times, made the point that today’s babies are tomorrow’s taxpayers, workers, and entrepreneurs, and relatively youthful populations speed economic growth and keep spending commitments affordable.
Simply put, fertility rates are important, both on an economical and cultural front, and the downward fertility trend should be alarming to everyone. In order to alter this trend, we should make it easier to raise kids. And as lawmakers, if we accept the notion that taxation can change behavior for businesses, why not for families?
That’s why I’ve introduced the Working Families Relief Act that would provide relief to working parents by making some of them eligible for the entire child credit refund — not just $1,400, as current law says. For example, a working mother of three pays over $1,400 in payroll taxes in a given year, then the entire $2,000 credit could be refundable for her under my bill.
By doubling the child tax credit and boosting the refundability of it, our country’s new tax law took a step in the right direction, towards a more family-friendly tax code that addresses the existing bias against parents. My bill aims to take another step towards that goal by providing additional tax relief for the working poor.
In testimony before the Senate Finance Committee last fall, Ramesh Ponnuru, a visiting fellow at the American Enterprise Institute, said this:
The parent tax arises, again, because parents are contributing to Social Security and Medicare both through their taxes — including especially their payroll taxes — and through the financial sacrifices they make to raise children. If we wish to reduce their contributions to put it on par with those of non-parents, we need to take account of the payroll taxes as well as the income taxes.
Looking at the numbers, in 2016, the left-of-center Tax Policy Center estimated that 44 percent of households paid no federal income tax that year, but nearly 60 percent of those households have members who work and thus pay Social Security and Medicare payroll taxes.
For the sake of this piece, let’s say a mother earning $40,000 who’s raising three kids owes the federal government $4,000 at the end of the year. After adjusting for the recent changes to the child credit, her net tax bill would now be zero. However, because the child credit is refundable, she would still be eligible for a refund of an additional $1,400. Under my bill, because she paid more than that in payroll taxes, she’d be eligible to receive the entire credit.
As Ponnuru noted in his testimony, this mother is making a double contribution to our country’s important government programs, both through her payroll taxes and also through the financial sacrifices she makes to raise children. In my view, she deserves a little extra relief.
If, as conservatives, we believe that pro-growth economic policies can heal all wounds, then it’s important to continue implementing such policies like the recent tax reform bill we passed. To that point, if we believe fertility is important and that today’s babies are tomorrow’s taxpayers, then we must strive through our laws to address this.
My bill aims to do just that.
Rep. Ted Budd, a Republican, represents North Carolina’s 13th district in Congress. You can follow him on Twitter: @RepTedBudd
