Improving Early Childhood Development by Allowing Advanced Child Tax Credits
A substantial body of research underscores that ensuring high-quality, developmentally supportive environments for young children — especially in the first years of life — is crucial to their individual futures and to the future of the nation. Yet millions of children spend large portions of those foundational years in low quality childcare, which jeopardizes their healthy development.
Most federal funding designed to address this problem is focused on subsidizing non-parental, out-of-home childcare. But many lower- and middle-income families still lack access to high quality childcare because they do not qualify for subsidies or because available subsidies are insufficient. At the same time, federal funding provides no help to parents who would prefer to care for their children at home but are financially unable to do so. This article proposes allowing parents to advance future child tax credits (CTC) into the earliest years of their child’s life, giving them greater choice in how to raise their young children.
Our proposal seeks to help two groups of parents. The first group is parents who choose or need to work outside the home but lack access to high-quality childcare. By providing families with earlier access to already-committed taxpayer resources, the proposal allows them to better obtain the non-parental care that serves the best interests of their young child’s development. The second group is parents who want to spend more time caring for their young children themselves, instead of placing them in non-parental, out-of-home care. For many children, the best early environment for supporting their healthy development. Increased parental care can yield important developmental benefits for children through more one-on-one nurturing interaction, increased stability, and more and longer breastfeeding, which is shown to reduce childhood illness and improve long-term health and cognitive development. Our proposal would also help reduce parental stress, increase family financial stability, reduce financial barriers to childbearing, and mitigate marriage penalties in other benefits.
We propose giving parents greater flexibility in the timing of their claims for the existing CTC to accomplish these ends. Under current policy, the CTC provides up to $2,000 per child per year for the first 17 years of a child’s life, totaling up to $34,000. Our proposal would give parents the option to pull up to $30,000 of those funds forward into as few as two years, providing up to $15,000 per year to help parents better cope with the exceptionally high costs of caring for children in their first years of life.
The budgetary effect of this proposal is expected to be relatively small over the long term because it adds no new spending but rather permits a shift in the timing of an existing tax benefit. In the wake of unprecedented increases in federal budget deficits driven by the coronavirus crisis, our proposal may be more legislatively viable than the creation of a federal paid leave program or large expansions of federal funding for non-parental childcare…
See Also
Op-Ed ~ February 1, 2021
Essay ~ February 22, 2017
Op-Ed ~ January 12, 2017