America's Failure to Rescue Parents: A Narrative of Inequitable Tax "Reform"

Abstract

Other developed nations provide a slew of direct benefits to parents, such as paid parental leave and affordable childcare. America instead takes a circuitous route, heavily relying on the Internal Revenue Code (the “Code”) to provide tax breaks to certain parents. In addition to being indirect and comparatively stingy, these “parental tax benefits” are not awarded equitably. Instead, they favor non poor one breadwinner families, ignore the plight of non poor working parents incurring substantial childcare and other work-related costs, exhibit an outright hostility towards poor parents and raise a host of other distributional concerns. This preferentialism is sticky––when Congress alters parental tax benefits, it rarely deviates from these patterns.

That is, until the COVID pandemic. Signed into law on March 11, 2021, the American Rescue Plan Act (the ARPA) provided much needed relief to parents attempting to maintain jobs and care for children during this global health crisis. As is America’s tendency, the ARPA leaned extensively on the Code to do so. But it abandoned its consistent preferentialism for non poor one breadwinner parents, expanding the various tax benefits available to non poor working parents and poor parents in historically significant ways.

This was short-lived. These benefits have now expired, leaving parents back where they started. And while it initially appeared that the ill-fated “Build Back Better Act” would resurrect many of the ARPA’s expanded parental tax benefits, Congress ultimately let them all lapse. Because the ARPA was born in an emergency (and expired well before it ended), it will be easy to dismiss it as crisis legislation. I resist this narrative and create a counter one. By situating the ARPA within a broader historical context, an accurate narrative is developed––one where the ARPA’s expansion of parental tax benefits was neither hasty nor creative but instead enacted long overdue adjustments that began to correct the distributionally problematic way in which America has historically favored some families over others.

Preserving this historic narrative is imperative. It underscores the alarming failure of Congress to extend any of the ARPA’s parental tax benefits. It provides context for temporary expansions passed by the House, which, despite making grand headlines, constitute a remarkably modest step towards treating poor parents similarly to non poor parents. And of critical import, the narrative of inequitable tax reform developed in this project, supported by history rather than politics and bias, should ground imminent conversations that will shape the future of how parents in America are taxed. The Tax Cuts and Jobs Act, which amplified Congress’ inequitable treatment of families and favoritism towards non poor one breadwinner families, expires in 2025, providing a date certain on which Congress must revisit its method of taxing parents. During these imminent and other future conversations, a mastery of the historical context preserved in this Article should arm those who advocate for a more inclusive method of supporting parents attempting to raise children in the United States.

Keywords: American Rescue Plan Act (the ARPA), Tax Cuts and Jobs Act (TCJA), parental tax benefits, Child Tax Credit