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1 Gerald Prante, Tax Savings from Child Tax Credit Vary Significantly from State to State 1 (2010)

handle is hein.taxfoundation/ffccixz0001 and id is 1 raw text is: FISCAL FOUNDATIONFC May20, 2010 No. 228 FC Tax Savings from Child Tax Credit Vary Significantly from State to State By Gerald Prante New IRS tax data by state for 2008 illustrate how much more the child tax credit is worth to some states than others (see Table 1 below). The average tax return in Utah saved $342 by claiming the child tax credit while the average tax return in D.C. saved just over $100. By law, a taxpayer can claim a $1,000 credit for each dependent child under the age of 17. The savings vary so much for two main reasons. First and most importantly, some states have families where there are simply more children. Historically, this is true in Hispanic homes and in the case of Utah, in families of the Mormon faith. Of course, children are also more likely to be present in families that are married, and therefore marriage rates are important. New York and D.C. are near the bottom because of their high rates of single households. Florida is near the bottom due to its high elderly population; for the most part, elderly Americans don't have children under 17. Another reason for the wide distribution is that the child tax credit begins to phase out for families making over $110,000. Therefore, high-income states are more likely to have the child tax credit taken away for families that do have children. So it is unsurprising that many high-income states (mostly in the Northeast) are at the bottom of the list. At the end of this year, the child tax credit is scheduled to revert from $1,000 to $500 per child as part of the general expiration of the Bush tax cuts. If that happens, the states at the top of the list would be the biggest losers while those states at the bottom wouldn't be affected much. However, most analysts consider it unlikely that Congress would allow the popular child credit to revert to $500. Politically, one can see a red-blue split. States that benefit most from the child tax credit tend to lean Republican (red), while those states that lean Democrat (blue) are at the bottom of this list. Note: Numbers here do not include the additional, or refundable, child tax credit. One effect of this is that the average child tax credit for returns claiming the credit (last two columns) is lowest for low-income states like Mississippi. Gerald Prante is a senior economist at the Tax Foundation.

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