Redesigning the Child Tax Credit to Reduce Economic Inequality: Changes to Benefits and Administration

Black and Latinx youth and children in mixed-immigration-status families experience higher rates of poverty compared to White children and non-immigrant families. Child poverty typically leads to a range of negative outcomes, including limited school readiness and intergenerational poverty. A temporary expansion of the Child Tax Credit (CTC) in 2021 reduced the child poverty rate to its lowest level on record, with especially steep reductions for Black and Latinx children. With expiration of the CTC expansion, however, child poverty rates doubled. As states begin to implement or consider state-level CTCs and federal policy actors promote versions with different forms of expansion, Maag and colleagues will conduct a mixed-methods study to examine how CTC policies can be redesigned to better meet the needs of Black, Latinx, and mixed-immigration-status families. They will convene advisory boards of Black, Latinx and mixed-status families with low incomes in two states to explore their perspectives on what would make the CTC more accessible and effective in alleviating economic inequality. Based on qualitative findings, the team will develop at least three alternative policy designs and use the Urban Institute-Brookings Institution Tax Policy Center’s microsimulation model to examine whether different iterations would better serve Black and Latinx families. Findings can provide insight into how tax policies can better reduce racial and economic inequalities at a critical political moment.