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1 1 (September 2017)

handle is hein.amenin/aeiaazg0001 and id is 1 raw text is: Powered by Open Source Policy Modeling Child Tax Credit Options Alex Brill I September 20, 2017 1 Tax Brief Series 1 Current Policy Under current law, a taxpayer can claim a Child Tax Credit (CTC) of up to $1,000 for each qualified child under 17 years of age. The credit amount is dependent on the taxpayer's modified adjusted gross income. If the CTC is greater than the amount of taxes owed, taxpayers may be eligible for the partially refundable Additional Child Tax Credit. 2 Reform Options I used the open source Tax-Calculator to simulate the effect of changes to the CTC. I simulated three scenarios: 1) increasing the CTC to $1,500, 2) decreasing the CTC to $500, and 3) eliminat- ing the CTC. Policy Taxpayers Taxpayers Taxpayers Taxpayers 10-Year Receiving Receiving Receiving Paying Zero Revenue CTC Tax Cut Tax Hike or Less Change, (millions) (millions) (millions) Income Tax Dynamic (millions) (billions) Current Law, 22.9 0.0 0.0 70.8 $0.0 $1,000 CTC Increase 24.2 30.1 0.1 72.2 -$263.3 CTC to $1,500 Decrease 21.3 0.1 32.1 69.4 $282.4 CTC to $500 Eliminate 0.0 0.0 34.0 67.5 $561.9 CTC 3 Comments Under current law, we expect 22.9 million taxpayers to claim the CTC in 2017. The number of taxpayers claiming the CTC increases by 5.6 percent when the credit is increased to $1,500. When the CTC is reduced to $500, the number of claiming taxpayers decreases by 7.2 percent. Increasing the CTC to $1,500 narrows the tax base, increasing the number of people paying no income tax by 2.0 percent. When the CTC is decreased to $500, the number of taxpayers paying no income tax decreases by 2.0 percent. If repealed, the number of taxpayers paying no income tax decreases by 4.7 percent. When the CTC is increased to $1,500, 30.1 million people receive tax cuts. When the CTC is decreased to $500, taxes increase for 32.1 million people. Increasing the CTC to $1,500 would cost $263.3 billion over 10 years; decreasing the CTC to $500 would save $282.4 billion.

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