Welfare without Work

The most contentious issue regarding income support for the bottom of the income ladder has to do with work.

As previously noted, the Earned Income Tax Credit and the Child Tax Credit, although largely Republican creations, have broad support in Congress from both political parties.

Goodman Institute study shows that by 2018, if a mother worked full time at the minimum wage, it was impossible for the family to be poor – regardless of the number of children. That conclusion is even more true today, since the average wage for unskilled (and moderately skilled) workers is more than twice the minimum wage, nationwide.

However, for six months during 2021, the Child Tax Credit (CTC) was replaced with something completely different. Congress turned the CTC, provided to working families, into a child allowance provided to all families regardless of their work effort.

According to American Enterprise Institute economist Kevin Corinth, this reform cost an additional $100 billion annually, likely contributing to the high inflation we have experienced for the past two years.  If made permanent, it would lead an estimated 1.5 million parents to exit the workforce. It would also put at risk the other benefits of tax credits that encourage work, including promoting the long-term wellbeing of children.

More on the history of the child tax credit here.


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