Let's Get Tax Reform Done

September 8, 2017

There is no way to sugar coat it. The last few months have not been good for the conservative movement. This past summer Congress failed to repeal Obamacare and now Congress has yet again kicked the can down the road on tackling our uncontrolled spending and working to reduce our continually growing debt that is about to reach $20 trillion.

But what is done is done, and we must now do our best to salvage the year by passing real tax reform before the year is out.
I firmly believe that the best way to build a winning coalition to pass tax reform is to make sure the legislation explicitly and directly helps American working families. And the best way to do that is to expand the tax code’s existing child tax credit.

All conservatives should support tax relief for working parents because the current code unfairly overtaxes them.

I don’t mean this in the generic sense that Washington overtaxes everyone. Though that’s true, too, of course.

Rather, I mean that today, parents raising children are discriminated against and effectively penalized by federal tax policy.
This hidden “parent tax penalty” is not as well known as the marriage tax penalty, but it’s an even greater challenge to working moms and dads. And I believe conservatives should insist on addressing it in any tax bill this Congress considers.

The penalty works like this. Because of how our federal senior entitlement programs are set up, parents pay for them twice.

Parents of course pay their payroll taxes, like everyone else does. But then they also contribute again, by bearing the enormous costs of raising their children – who of course grow up to become the next generation of citizens, workers, leaders, and taxpayers on which the whole system depends.

Parents alone bear this double burden during the years they’re raising their kids. It’s not a natural consequence of having children – like sleep deprivation or mowing the lawn in shorts and over-the-calf dress socks. Rather, it’s a dysfunctional consequence of poorly written government policy.

And so it seems to me that policymakers need to figure out some way to offset that inequity.

The current, $1,000 per-child tax credit is a good start. But over 18 years, $18,000 barely makes a dent in the costs of raising a child – which runs to hundreds of thousands of dollars. And so I think it should be bigger. A lot bigger. Two-thousand dollars per child? Twenty-five hundred?

Furthermore, because the payroll tax is the real tax burden most middle class families face, the child credit ought to be applicable to payroll taxes, too - not just income taxes.

The child credit, thus, does not create an inequity in the tax code; it helps to correct one that already exists.
Americans voted for change last November, and frankly we have not delivered so far. But passing tax reform that would return billions of dollars to working families would be a great place to start.