WHY THE NEED FOR A UNIFIED CHILD CREDIT?
Families claiming tax benefits for their children face a bewildering and often conflicting array of tax programs and eligibility rules. Currently, families may apply for one or more of the following: the earned income tax credit (EITC), the child tax credit, the additional child credit, the dependent exemption,2 and the head of household rate schedule. Each program offers a different kind of benefit, such as a tax exemption, a tax credit, or a tax-advantaged rate schedule; a different benefit amount, such as a maximum of $4,200 per family versus $1,000 per child; targets a different segment of the population, such as very low income, lower to middle income, or middle to upper middle income; and phases in or phases out over different earnings and income ranges and at different rates that are often hidden and high. To save on revenues, on the other hand, lawmakers have subjected each child tax provision to different sets of phase-outs or treated one provision (the dependent exemption) as
