Ohio economists: Child tax credit would be a boon

It would be great for Ohio’s children and for the economy in general if Ohio introduced child tax credits similar to the federal government’s that expired earlier this year. That was the overwhelming consensus in a survey released Tuesday from a panel of state academic economists.

In the survey conducted by Scioto Analysis, 21 of 23 economists agreed or strongly agreed that such tax credits would significantly reduce child poverty. Nineteen of the 23 agreed that “a state child tax credit would be offset in the long run by the tax benefits of improving the living conditions of children no longer growing up in poverty.

Last July, the federal government introduced a credit that gave families $300 a month for each child under six and $250 a month for each child aged 6 to 17. U.S. Senator Joe Manchin, DW.V., effectively killed the program early. this year for fear that families will spend money on things they shouldn’t, for example, to buy street drugs.

However, there doesn’t seem to be any evidence to support this.

The Federal Reserve last month published a survey saying that “parents who received monthly payments (Child Tax Credit) most often saved the payments, spent them on their child, or used them for necessities. Savings was the most common use of monthly CTC payments, with 43% of recipients reporting saving at least some of it. »

As expected, when broken down by income, parents earning less money were more likely to spend the money on necessities rather than saving it.

Despite Manchin’s concerns, the tax credit would have a significant impact on child poverty. Researchers at Columbia University reported in January that the tax credit reduces monthly child poverty by 30%.

In comments accompanying the Ohio survey, two of the economists said a federal credit extension would be preferable to Ohio undertaking one. Another economist, Kathryn Wilson of Kent State University, said the details would determine the effectiveness of a state-level tax credit.

“It depends on the size of the tax credit, if it’s refundable, and who’s eligible,” Wilson wrote. “A larger, refundable tax credit available to low-income households with children can certainly significantly reduce child poverty. On the other hand, a small credit or a credit that is non-refundable or has barriers to qualification may have a limited effect.

Along with several other economists, Paul Holmes of Ashland University said it is difficult to quantify a “substantial” reduction in child poverty. But he said it was clear a child tax credit would help.

“It’s almost tautologically true,” he writes. “The only debate may come regarding the word ‘substantially,’ but I think the evidence from ‘experience’ at the federal level makes that clear.”

The Ohio state government spends billions in business grants, loans, and tax breaks to grow the state’s economy. One of the economists responding to Tuesday’s survey suggested that reducing child poverty would be a particularly effective approach to developing the state’s economy.

“Children are our future workers,” wrote Kevin Egan of the University of Toledo. “I think it’s one of the most efficient and fair uses of our tax dollars.”

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Julio V. Miller