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The Child Tax Credit:
Washington Families Enjoy Benefits of 1997 Taxpayer Relief Act

by Jeff Hanson, Research Analyst
1999-12

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Lawmakers routinely trumpet their ability to “secure” funds for their district.  Glance through Senators’ press releases and you will see examples such as:

“Gorton Announces Funds for Ravenna Creek Restoration”

“Murray Announces $1.4 Million to Assist 355 Workers in Clallam and Jefferson County”

Well, if these examples of government spending are newsworthy, so too is the couple hundred million dollars in federal income tax relief that Washington parents received in 1998.

The child tax credit, part of the Taxpayer Relief Act (P.L. 105-34) passed by Congress two years ago, allowed taxpayers to reduce what they owed for 1998 income taxes by $400 for each dependent under the age of 17.  Beginning in 1999, the tax credit increases to $500 per eligible child. 

The tax credit is targeted to families that need it most.  Above certain income levels the credit is phased out (for married couples, the credit diminishes by $50 for every $1,000 in income above $110,000).

A recent report by the Heritage Foundation’s Center for Data Analysis estimates that more than 870,000 children in Washington state qualified for the child tax credit in 1998.  In Table 1 we estimate the number of eligible children by county.  As is evident from the table, a substantial number of families throughout the state received a direct benefit from the child tax credit.

Such tax relief is all the more important to working families because the recently completed state legislative session failed to deliver a tax cut, even though the state’s budget surplus has grown to over $1 billion.

Technical Notes:  Sources and Method

How were the estimates in Table 1 calculated?  First, for the statewide total of 872,200 we relied on a recent report by the Heritage Foundation’s Center for Data Analysis.[1]  Then, we apportioned this state total by county using Bureau of the Census data for child population and family income.

The statewide estimates of the number of eligible children were calculated in the Heritage report by using the Census Bureau’s 1998 March Current Population Survey.  Three main steps were taken: 1) only children under 17 were considered; 2) those children whose family income was too high to qualify for the credit were dropped from the analysis; and 3) children were considered eligible only if—after subtract-ing other tax credits—their family still owed federal taxes.

The Heritage report then used data specially provided by the Census Bureau to estimate the number of eligible children for each congressional district.  The special tabulation from the Census Bureau was used to determine the number of children under age 17 in each congressional district whose family incomes were not below the poverty line.  For each district, this measure was recalculated as a percentage of the statewide total.  These percentages were taken as an appropriate estimate of a district’s “share” of the statewide total of children eligible for the tax credit.

We employ a similar method to apportion the Washington state total by county (Table 1).  To do so, we rely on two sources of Census Bureau data: the Population Estimates Program and the Small Area Income and Poverty Estimates Program.  The former provides estimates for county population under age 18; the latter estimates the number of these children in poverty.[2]  Note that these data are for children under age 18, rather than under age 17, which is the relevant age for the child tax credit.  These data are used simply because of their ready availability.[3]

From these two data sources we calculated the number of children in Washington state who are under 18 and not in poverty; the same calculation was made for each county.  Each county’s total as a percentage of the state total was then used to apportion the statewide estimate of children eligible for the tax credit (872,200).  Table 1 estimates were rounded to the nearest hundred so as not to imply excessive accuracy.

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