The Case for the Connecticut Child Tax Credit - February 2022 - Research and Policy Report

Sep 19, 2026

This report argues that Connecticut’s tax system inadequately supports families with children, especially working- and middle-class households and families of color. It links high and rising child-rearing costs to tax burdens, explaining how income inequality and a racial income gap worsen outcomes for children and weaken the state economy. The document details federal income tax and state income tax roles, then evaluates options for a Connecticut Child Tax Credit, including transparency and timely refundable support.

LanguageEnglish

CategoryGeneral

FormatPDF

Pages39

Reading Time14 min

AccessFree to download

Glossary

Introduction

The High and Growing Cost of Raising Children

Support for the High and Growing Cost of Raising Children: The Federal Income Tax

Key Components of the Federal Income Tax for Families with Children

Federal Income Tax for the Average Middle-Class Family in Connecticut

Support for the High and Growing Cost of Raising Children: State Income Taxes

50-State Overview of Income Tax Support

New York’s Income Tax Support

California’s Income Tax Support

Connecticut’s Lack of Income Tax Support

Options for the Connecticut Child Tax Credit

Conclusion

Acknowledgements

References

The Case for the Connecticut Child Tax Credit Patrick R. O'Brien, Ph.D., Research and Policy Fellow FEBRUARY 2022 Table of Contents Glossary ………………………………………………………………………………………….... 3 Introduction ……………………………………………………………………………………..... 4 The High and Growing Cost of Raising Children …………………………….…………….….. 8 Support for the High and Growing Cost of Raising Children: The Federal Income Tax ..…. 12 • Key Components of the Federal Income Tax for Families with Children ………………….… 12 • Federal Income Tax for the Average Middle-Class Family in Connecticut ……………....….. 16 Support for the High and Growing Cost of Raising Children: State Income Taxes …………18 • 50-State Overview of Income Tax Support ……………………………………….………....... 18 • New York’s Income Tax Support……………………………………………………………... 20 • California’s Income Tax Support……………………………………………………...………22 • Connecticut’s Lack of Income Tax Support …………………………………………….……..24 Options for the Connecticut Child Tax Credit ………….……………………………….….…. 27 Conclusion ………………………………………………………………….……….…….…….... 33 Acknowledgements ……………………………………………………………….…….….…….. 34 References …………..……...…………………………………………………………....………... 35 Glossary Child and dependent care tax credit (CDCTC) is a tax credit included in the federal income tax and many state income taxes to help offset the high cost of child care. Child tax credit (CTC) is a tax credit included in the federal income tax and many state income taxes to help offset the high cost of raising children. Effective tax rate is the total amount of taxes that a family pays as a percentage of its income. Fair tax system either, at minimum, requires all families to pay the same percentage of their income in taxes (i.e., a proportional tax system) or, ideally, requires upper-class families and the wealthiest to pay a higher percentage of their income in taxes than working- and middle-class families (i.e., a progressive tax system) . It also generally requires tax transparency. Income is the flow of money that a family receives over a given period of time, and it is derived from an array of sources, including salaries and wages, business income, investment income, and more. Inflation indexing is the inclusion of automatic cost of living adjustments. Racial income gap is the difference in income among populations grouped by race or ethnicity. Refundable tax credit is paid to a tax filer regardless of their tax liability. Tax credit directly reduces a tax filer’s liability. Tax gap is the difference between the tax owed to the government and the tax actually paid. Tax liability is the tax owed by a family or business to the government. Tax reform is shifting the disproportionate tax burden on working-and middle-class families to the wealthy. Tax transparency is knowing the necessary amount of the disproportionate tax burden to shift, the impact of proposed and passed tax legislation, and the size of the tax gap. Timely support is providing working-and middle-class families the option of receiving refundable tax credits in installments. Unfair tax system requires working- and middle-class families to pay a higher percentage of their income in taxes than upper-class families and the wealthiest (i.e., a regressive tax system) . Introduction As addressed in our recent tax report—“Steps To A Fairer Tax System”—half of Connecticut’s families in 2021 had difficulty paying their usual expenses (e.g., food, housing, utilities) . 1 The problem has continued in 2022 and appears to be getting worse. In January, 53 percent of the state’s families had difficulty paying their usual expenses, and the percentage was even higher for certain subgroups, especially working-class and lower-middle-class families (78 percent and 62 percent), Black and Latino/a/x families (77 percent and 74 percent), and families with children (65 percent) .2 Although Connecticut has the second highest level of per capita personal income in the U.S., ma

FAQs

Why does the report focus on the Connecticut Child Tax Credit?

Because Connecticut’s income tax does not adjust for family size or child care expenses, the report argues the state’s tax system becomes especially unfair for families with children, particularly those needing child care.

What problem does the report describe in Connecticut households during 2021–2022?

It describes continuing difficulty paying usual expenses, with higher rates among working-class and lower-middle-class families, Black and Latino/a/x families, and families with children.

How does the report connect income inequality and racial income gaps to child outcomes?

It states that, through both investment and stress pathways, these factors negatively affect children from working- and middle-class families, especially families of color, across areas including health, education, labor market success, and risk behaviors.

Sep 19, 2026

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