“Oklahoma’s child tax credit has not been updated since 2007, which means our state has not kept up with the cost of raising children,” said Nice, D-Oklahoma City. “Being able to listen to how families in our state can better benefit from modernizing the CTC was the whole purpose of this study, and we heard from tax and economic experts who talked about how it would strengthen families and improve outcomes for hundreds of thousands of Oklahoma children.”
Oklahoma’s CTC is non-refundable, meaning it is applied to the taxes a family owes each year. Dr. Jacob Bastian, Senior Fellow at the R Street Institute, pointed out because Oklahoma’s child tax credit is non-refundable, lower income families who need that credit most, receive little or no benefit compared to families earning more money. He said a parent with three children earning below $18,000 would owe little to no taxes, and so would receive no benefit from the credit, while a family earning $50,000 and owing about $1,100 would be able to claim the full CTC benefit of about $300 for three kids. If the credit was refundable, both families would get the full amount. Bastian said refundable credits have numerous benefits, including building stronger families and incentivizing work force participation, and creating greater stability for children.
“They also reduce poverty. Giving families tax credits is good for kids’ health. Studies have shown that when kids are born, they’re actually healthier. They’re less likely to be low birth weight,” Bastain said, noting they continue to be healthier as they grow up. “Having more resources…reduces stress and just gives families more opportunity to help their kids. We know that these tax credits help kids literally have higher test scores, have higher high school graduation rates, go to college more, and even graduate college. When they’re in their 20s and 30s, they’re actually working more and earning more.”
Eli Bylerly-Duke, State Policy Analyst of the Institution on Taxation and Economic Policy, said one in five Oklahoma children live in poverty, but a $1,400 base credit could reduce that by about a quarter. He said the best child tax credit would be fully refundable, per-child benefits with a young child bonus, because the cost of raising younger children is much higher.
Jessie Barnett, from Woodward, testified about the impact of Oklahoma’s child tax credit on her family. She and her husband have four children, two adopted, and two that are in the process of being adopted. Their income for a family of six this year is expected to be $40,000 to $45,000, and the federal poverty level for a family of six is $43,150. They qualified for a federal tax credit refund last year of more than $3,000, which helped pay for necessities for their children, and said that money was used in their community. But while they qualified for $400 for the Oklahoma child tax credit, because their state tax liability was so low, they only received $100. She said had the credit been refundable, the additional $300 dollars would have helped her family. She told legislators a refundable credit at a higher amount would be monumental.
“I want to be clear, that I do not see the tax credit as a government handout. Raising children is not an easy task, and it takes lots of effort, dedication, and hard work. But even so, it takes a village. I have managed to raise my four children to be respectful adults. In this economy, every dollar counts,” said Barnett, who also said she knows there are concerns about making the credit refundable. “But the truth is that this extra money is not nearly enough to justify staying at home. It is (a) supplemental boost to our household income, but not a replacement for a full-time job. It will never be, but it would make a huge difference to the families and the stability.”
Barnett said if the state of Oklahoma wants to improve the state’s education outcomes, health outcomes and economy, the Legislature has to invest directly in Oklahoma families like hers, and told committee members, “when families struggle, the children struggle too, and we all want what’s best for our children.”
Nice said she appreciated Revenue and Taxation Chair, Sen. Dave Radar, R-Tulsa, for agreeing to hear her interim study, and for the testimony presented.
“A refundable child tax credit is fiscally responsible, pro-family, pro-work, and the additional resources help families raise healthier kids with stronger test scores and better school completion,” Nice said. “I am hoping that we’ll be able to bring legislation forward to help us do that.”
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