“Fixing” What Wasn’t Broken: Why Biden’s Child Tax Credit Scheme Is a Recipe for Failure


Prior to the passage of the American Rescue Plan (ARP) in March 2021, American families were eligible for the Child Tax Credit, which was most recently revised by the Trump tax cuts (Tax Cuts and Jobs Act of 2017). However, following the implementation of the ARP, the Child Tax Credit program significantly changed. Credits were hiked, the maximum age for qualifying kids was increased, and, perhaps most importantly, part of the credit is now being distributed in monthly payments, rather than as a lump sum.

On the surface, some of these changes might seem generous or helpful. But a look under the hood quickly reveals these changes will actually do more harm than good.

Instead of providing a break for working Americans, the Biden Child Tax Credit scheme will simultaneously discourage work while actually helping the financially well-off. In short, the Biden administration—and their willing partners in Congress—took a fine system that was easy to understand and reliable and broke it. They transformed it instead into a poorly designed set of monthly payments containing backwards incentives, fatal flaws, and administrative nightmares.