The Tax Treatment of Children: Separate but Unequal

Abstract

Tax credits for children are found in two separate tax provisions. The Earned income tax credit (EITC) and the Child Tax Credit (CTC) are similar in many ways, yet in crucial respects EITC recipients are disadvantaged when compared with CTC recipients. This piece seeks an explanation for the disparity and ultimately finds that the only plausible explanation is a race based one. Politicians recently played the race card by analogizing the EITC to welfare. Academics argue without empirical support that low-income taxpayers who receive the EITC are Black and disproportionately benefit from the credit. This Article provides the first comprehensive empirical analysis of low-income taxpayers and shows that the majority of EITC- eligible taxpayers are White and that a greater percentage of Blacks are EITC- ineligible than are EITC-eligible. EITC provisions that disadvantage EITC recipients will disadvantage Whites. By making the earned income tax credit a problem of low-income Blacks, academics and politicians have ignored the larger class issue. This Article, by taking account of race in order to move beyond it, reveals that real EITC reform is possible and argues that CTC benefits currently available only to middle income children should be available to low-income children.