Families Want Economic Growth, Not Bigger Child Tax Credits

Families Want Economic Growth, Not Bigger Child Tax Credits

Rand Paul is the real reform conservative, while the self-proclaimed reformers just keep tweaking at the margins of disaster.
Rich Cromwell
By

If you’re like me, you contemplate divorcing your wife on an annual basis. It’s not that the love is gone, but, man, staying married is expensive. Never fear, though, because the Reformblicons are on it and offering up their usual solution—increased child tax credits. While it’s tempting to look at this solution as pro-family and one that puts money back in our pockets, as is always the case with such nudge-y solutions, the real answer is to vote Megatron.

Okay, maybe global destruction isn’t the answer, but neither are silly tax credits that will supposedly encourage people to do the nasty. The reform conservatives don’t put it in quite those terms; they simply imply it. Who is their current champion? Marco Rubio. And don’t call what Rubio is proposing social engineering, because it totally isn’t. It’s the opposite, says Pascal-Emmanuel Gobry.

The family has been the victim of social engineering. As reform conservatives often point out, entitlements like Social Security and Medicare create a disincentive to have children, since parents pay for old-age entitlements twice — by paying taxes, and by paying to educate future taxpayers to fund those entitlements. More generally, liberal elites, through experimentation with social norms — aka the Sexual Revolution — have created for many people a dystopian landscape of family breakdown.

Look, Social Security is nonsense. While theoretically an investment or something, those of us who reside in Generation X and younger know it’s a tax. We’re not getting that money back because the Baby Boomers didn’t breed at replacement rate and the pyramid scheme that is Social Security requires a high level of fecundity. If the reform conservatives really want to make a difference, maybe they should take the time machine designated for killing Baby Hitler not back to Austria 1889, but to Hyde Park 1882.

Stop Playing Games With My Money

I kid, I kid. I am not advocating going back in time and killing any babies. If Hollywood has taught us anything, it’s that the proper solution is to go back in time and kill their mothers. Nevertheless, what the reform conservatives are proposing is overcoming a stupid positive-right entitlement created by the second-worst president ever by replacing it with a different positive-right entitlement. Of course, they won’t call it that, because “Rubio’s tax credit is not an entitlement, or a handout, or welfare. It’s a tax cut. If people get a check from the government, it’s as a refund for taxes they’ve already paid.”

A tax cut means we get to keep our money and decide what to do with it all by ourselves.

Technically, this is true, in the same sense that Social Security isn’t a tax. But you know what a real tax cut looks like? It looks like money in your bank account. It looks like money that the government didn’t borrow for a minute before giving it back because you made the “correct” decisions.

I realize this is a super-wild proposal, so will give you a few moments to collect your thoughts. The idea that a tax cut means we get to keep our money and decide what to do with it all by ourselves—all of us and not just those who have procreated—is anathema to DC. But if we really want to create a plethora of baby bumps, the key is to grow the entire economy and not offer nebulous incentives for super-specific actions that may or may not lead to more baby bumps.

Also, Social Engineering Doesn’t Work

Oh, and here’s the other thing. There’s also the demonstrable fact that the reform conservatives’ ideas have been tried and found wanting.

The child tax credit was adopted in the 1990s and expanded during the Bush years. The earned-income credit also funnels a lot of money (in the form of tax relief or cash payments) to families with children, and that provision also has been significantly expanded over the years.

These policies have worked, at least in the sense that households with children now face lower tax liabilities. There is little evidence, though, to suggest positive economic or social outcomes. Were families strengthened? Did the economy grow faster? Did middle-income households feel more secure? In the absence of supporting data, it is not wise to double down on more of the same.

But, but, but, as Gobry noted, the family has been the victim of social engineering. The middle-class family isn’t holding, and the GOP has utterly failed to address their needs. While all this has occurred while child tax credits have flowed, never fear, because Rubio’s plan goes to 11.

Do You Want A Slice or Do You Want Bigger Pie?

Those who are married and filing jointly can claim Rubio’s credit all the way up to a combined income of $300,000, which is actually an eminently reasonable amount if you’re trying to raise some young ‘uns and you’re not a class warrior. The tax credit is refundable against payroll taxes, a.k.a. those things we feed the locusts feasting on Social Security. Hell, this isn’t even a replacement for the existing child tax credit, but an addition to it. So what’s not to love?

What parents need is some actual growth.

Everything—at least if you want to bequeath a world to your children in which they can succeed and provide you with some grandchildren. The child tax credit may throw a little cash back into the pockets of strapped parents, but what parents need, what a growing economy needs, and what it takes to grow a new baby boom isn’t some scraps, but some actual growth.

As Daniel Mitchell noted, “Tax-credit conservatives generally admit that child-oriented tax cuts have few, if any, pro-growth benefits. Yet there is considerable agreement that supply-side reductions in tax rates can boost economic performance, even if there is no consensus on how much growth would rise.”

Reform conservatives can chide Rand Paul all they want, but he’s offering a true free-market solution and not trying to use tax policy to push the United States into a reverse China policy. Given the trajectory of the country since the New Deal, Paul is arguing for true reform, while the “reform” conservatives are arguing we just need to tweak around the edges.

Richard Cromwell is a senior contributor to The Federalist. Follow him on Twitter, @rcromwell4.

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