Now that Congress appears to be moving on from health insurance reform, national tax reform is up next.
With Senator Orrin Hatch (R-Utah), Senate Finance Committee chairman, playing a key role in tax reform negotiations, he has an opportunity to champion Utah’s working and middle-income families through pro-family, pro-growth tax reform policies. One policy idea that will provide real tax relief for families is expanding the child tax credit, as proposed by Senator Marco Rubio (R-Florida) and Senator Mike Lee (R-Utah) in their Economic Growth and Family Fairness Tax Plan.
The typical family in Utah works hard every day to get their children through school, pay the bills and prepare for future education and retirement costs. And they lose more than one-quarter of their income to the federal government each year.
Under the Rubio-Lee approach, these families would be able to reclaim up to $2,500 more of their hard-earned money each year, up to their combined federal income and payroll tax liability. The Trump administration recently endorsed this approach, touting it as good for working families.
Sutherland Institute analyzed IRS tax data to examine the impact of expanding the child tax credit. What we found is good news for Utahns.
Utah’s working families, on average, have more to gain than many parts of the country, due to the higher number of children we have. Additionally, expanding the child tax credit is likely to be financially and economically significant for Utah families because the tax credit represents a larger portion of income for Utahns than for many other areas of the country.
This is especially true for rural Utah counties, where an extra $2,500 or more per family can be a game changer – for the family and the local economy, which will indirectly benefit as the community has more income to spend. In a similar vein, an extra $2,500 or more will mean more to low-income working families than wealthier families. Expanding the child tax credit targets the largest financial impact to those with the greatest financial need.
These benefits hold true for America as a whole. The areas outside of Utah that benefit the most from expanding the child tax credit include the Sun Belt, Idaho, and the more rural parts of the Pacific Northwest, Midwest and Northeast. These are the “forgotten Americans” for whom both political parties are currently competing, and whose support delivered the presidency to Donald Trump.
But the Rubio-Lee approach is more than just good politics for elected officials – it’s good policy for Utahns and Americans because the expanded child tax credit both strengthens families and encourages economic equality.
It does the former by offering tax relief to families that make it easier to put food on the table, pay for a child’s college education and save for retirement – lessening the marital strain from family finances. It does the latter by saving the largest financial impact of the tax credit for those who need it the most – working- and middle-class families.
Expanding the child tax credit ought to be an essential part of the national tax reform dialogue. Utah’s rural, working-class and middle-income families will be well served if Hatch ensures that such pro-family, pro-growth tax reform finds its way into legislation.
Derek Monson is executive director at Sutherland Institute, a conservative public policy think tank in Salt Lake City that promotes free markets, civil society, and community-driven solutions.
