Why Ivanka Trump wants to extend the child tax credit

By M.S.R. | WASHINGTON, DC

THERE were hopes, in the early days of the Trump administration, that Ivanka Trump would be a moderating influence on her father. She encouraged them, by talking up the progressive causes she claimed to cherish: climate change, the rights of gay and transgender Americans and immigrants; gender equality. But these are areas in which Donald Trump has introduced some of his most regressive policies. He has withdrawn America from the Paris agreement and said he would ban transgender soldiers from the military. He has repeatedly sought to curb travel to America from some Muslim countries and said he would ditch a programme that protects undocumented immigrants, brought to America as children, from deportation.

In August Ms Trump, an unpaid adviser to the president with an office in the West Wing, was herself charged with announcing a plan to scrap an equal-pay initiative of the previous administration. Requiring companies to report salary data by gender alongside other information about their workers, it had been hailed as a modest first step in the battle to close the gender pay gap, which Ms Trump had repeatedly rued; she offered no alternative measure. There has been little reason to think she has any influence in the administration on the issues she claims to care about most.

Now she has an opportunity to improve her record, with a provision of the putative tax reform the Republicans are working on. In recent weeks Ms Trump has lobbied both Republican and Democratic congressmen to expand an existing child tax credit as part of that effort. An annual credit of up to $1,000-a-child for low and middle-income households with children, it was introduced by Bill Clinton in 1997—and is estimated to have lifted 3m children out of poverty last year. Though Ms Trump has not said publicly how much she wants this provision increased by, beyond a "significant" amount, an aspiration to do so was included in the tax reform “framework” Mr Trump unveiled last month. The president has also suggested that that was at his daughter’s behest. Speaking in Springfield, Missouri, in August he said his tax plan would include: “helping parents afford childcare and the cost of raising a family. That's so important to Ivanka Trump. Very, very important to everybody in this room, but so important to my daughter. It's one of her real big beliefs. And she's very committed to that. Right, Ivanka?"

There are two reasons why expanding the child tax credit would be an important achievement. First, it has not been raised since 2001, when George W. Bush increased it (from $500-a-child) and there is growing bipartisan support for its expansion. Thanks in part to Ms Trump’s efforts, this seems to have replaced an earlier plan by the administration to make child-care costs tax deductible. A child tax credit is better, in part because is also available to those who do not have children in day care centres.

More importantly, expanding the child tax credit might be the only way Mr Trump gives some middle-class Americans the tax cut he has promised them. Other features of his draft plan—chiefly the loss of personal exemptions—suggest that families with children could otherwise end up being worse off. An expanded child tax credit could make up the difference, but only if it is big enough. According to a study by the Tax Policy Center, a non-partisan think-tank, a $500-a-child increase to the existing child tax credit could (subject to a number of other assumptions) lead to an overall tax increase on 17% of households with children by 2018 and 44% by 2027.

That is why Marco Rubio, a senator from Florida, says it should be doubled, to $2,000-a-child, and made fully refundable. In other words, poor families who do not pay federal income tax could claim the credit in the form of a cash payout from the Internal Revenue Service. Mr Trump's current plan would not make any increase refundable. And because doubling the size of the credit would be expensive, it is unlikely to pass. But, "any extension would be seen as a big win for Ivanka Trump", says Aparna Mathur, a resident scholar in economic policy studies at the American Enterprise Institute. "And that will make it easier for her to get other things done".