Free-market group: Get rid of child credit, lower rates instead

A new study from a prominent free-market group suggests getting rid of the child tax credit and instead slashing tax rates, underscoring a growing divide among Republicans on economic policy.

The Mercatus Center study made the case that using the revenue lost to the child credit to lower rates “would benefit all taxpayers, not just parents.”

{mosads}”It would also provide social benefits in terms of increased productivity and economic growth, and this is the most relevant comparison to any social benefits from additional children,” Jeremy Horpedahl, an economics professor at Buena Vista University in Florida, wrote in the paper. The Mercatus Center is part of George Mason University.

The paper comes as reform-minded conservatives are pushing back against traditional GOP efforts to seek broad-based tax cuts, especially at the higher end of the income scale. 

That debate has spilled over into the 2016 race, with Sen. Marco Rubio (R-Fla.) proposing a plan that would bolster tax incentives for children while only cutting the top individual rate from 39.6 percent to 35 percent. 

Other Republican contenders, like Sens. Ted Cruz (Texas) and Rand Paul (Ky.), have said they back the sort of flat tax that has been popular among Republicans since at least when Steve Forbes ran for president in 1996.

In the Mercatus paper, Horpedahl makes the case that the child tax credit costs some $57 billion a year without focusing mainly on helping lower-income families, unlike the food stamp program or the Earned Income Tax Credit. 

Horpedahl wrote that around a quarter of taxpayers at each income group up to $200,000 a year claim the credit, which can offer families up to $1,000 a year per qualifying child.

At the same time, the Mercatus study was also clearly skeptical that the societal benefits of having children — including the adding of future taxpayers to help sustain programs like Social Security — was worth the cost of the tax credit. 

“It is extremely difficult, perhaps impossible, to measure whether families are having the ‘right’ number of children from a social perspective,” Horpedahl wrote.