In the 1990s, several liberal welfare regimes (LWRs) introduced child tax credits (CTCs) aimed at reducing child poverty. While in other countries these tax credits were refundable, the United States alone introduced a nonrefundable CTC. As a result, the United States was the only country in which poor and working-class families were paradoxically excluded from these new benefits. A comparative analysis of Canada and the United States shows that American exceptionalism resulted from the cultural legacy of distinct public policies. We argue that policy changes in the 1940s institutionalized different "logics of appropriateness" that later constrained policymakers in the 1990s. Specifically, the introduction of family allowances in Canada and other LWR countries naturalized a logic of income supplementation in which families could legitimately receive cash benefits without the stigma of "welfare. " Lacking this policy legacy, American attempts to introduce a refundable CTC were quickly derailed by policymakers who saw it as equivalent to welfare. Instead, they introduced a narrow, nonrefundable CTC under the alternative logic of "tax relief, " even though this meant excluding the lowest-income families. The cultural legacy of past policies can explain American exceptionalism not only with regard to CTCs but to other social policies as well.

Abstract:In the 1990s, several liberal welfare regimes (LWRs) introduced child tax credits (CTCs) aimed at reducing child poverty. While in other countries these tax credits were refundable, the United States alone introduced a nonrefundable CTC. As a result, the United States was the only country in which poor and working-class families were paradoxically excluded from these new benefits. A comparative analysis of Canada and the United States shows that American exceptionalism resulted from the cultural legacy of distinct public policies. We argue that policy changes in the 1940s institutionalized different "logics of appropriateness" that later constrained policymakers in the 1990s. Specifically, the introduction of family allowances in Canada and other LWR countries naturalized a logic of income supplementation in which families could legitimately receive cash benefits without the stigma of "welfare. " Lacking this policy legacy, American attempts to introduce a refundable CTC were quickly derailed by policymakers who saw it as equivalent to welfare. Instead, they introduced a narrow, nonrefundable CTC under the alternative logic of "tax relief, " even though this meant excluding the lowest-income families. The cultural legacy of past policies can explain American exceptionalism not only with regard to CTCs but to other social policies as well.

Joshua McCabe on the fiscalization of social policy.

Chapter 2 looks at the “great divergence,” when logics of appropriateness were institutionalized in public policies. It shows just how similar all three countries were in the interwar period. Prior to World War II, American, British, and Canadian policymakers held similar views on when it was appropriate to provide direct cash benefits to families with children. Nascent projects for postwar reconstruction changed this in Canada and the UK as each country introduced family allowances in the mid-1940s. Children were recognized for the first time ever as deserving of direct cash benefits according to a new logic of income supplementation. The US on the other hand never introduced family allowances. The unintended result was the noninstitutionalization of the logic of income supplementation for families. The policy legacies established during this period were crucial for shaping later responses to inflation and child poverty.

Chapter 6 looks at how the National Commission on Children brought attention to the problem of child poverty in the US, leading to the expansion of the Earned Income Tax Credit in 1993 and the introduction of the nonrefundable Child Tax Credit in 1997. In contrast to the cases of Canada and the UK, the growth of these tax credits, tracing their legacy to the dependent exemption in the tax system, was premised on the logic of tax relief rather than the logic of income supplementation. Originally, the National Commission on Children released recommendations for a fully refundable Child Tax Credit as the best way to tackle child poverty. This served as a successful springboard in Canada and the UK. This was not the case in the US, where the logic of tax relief remained dominant. Initial attempts to introduce a fully refundable Child Tax Credit quickly failed. Policymakers and the public deemed poor children undeserving of tax credits because their parents were not technically taxpayers.