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The child allowance would amount to $4,200 per year for kids under 6, and $3,000 per year for kids 6 and over. Families would get a monthly check beginning in the third trimester of pregnancy. This minor policy tweak would almost certainly reduce the abortion rate, as it did when Spain adopted a similar policy.

Currently, the Federal government provides a $2,000 Child Tax Credit (CTC) per child. The CTC is a complicated animal. People with less than $2,500 in income can't receive it at all, and the credit "phases in" at a rate of 15 cents on the dollar. Part of the credit is refundable, which can lead to a "negative income tax," but not the whole thing. The result of this approach is that 1) families receive the benefit associated with their kid retroactively, or after they might have used money on that child, 2) families get the benefit in a lump sum, and 3) many families never "receive" the CTC at all because it only reduces their taxes owed, never landing in their bank account. Furthermore, the way the phase-in works, many low-income people are excluded from the CTC. On the other hand, because the CTC phases in, it encourages people to work: a person in the CTC phase-in income range (generally less than $30,000 in income, depending on the number of children) might get $15 extra from the CTC for every $100 extra they earn, giving them extra incentive to get a job.

In sum, the CTC is a very complicated, indirect way of supporting families. Most families will never think very much about how it's calculated. But those who do may notice a pro-work element to the CTC that is only for people with kids.

The EITC is even more complicated. Right now, there are eight different EITC benefit calculations, depending on marital status and number of children. But the simple version is, the EITC gives extra money to people who are employed and working, but whose incomes are still low. It's a way the government encourages work and helps people make ends meet even if wages are very low. The EITC gives you a lot of money (up to over $6,000 per year) if you 1) have kids, 2) work about 30 hours a week at minimum wage, 3) stay unmarried. The current EITC is less generous for married people, and the generosity rises with each kid. Academic research suggests the EITC as it currently exists discourages childbearing on net.

The EITC does a lot to encourage work among the people for whom it is most generous. That is, among single moms, the EITC boosts employment. If you are poor, unmarried, and have custody of 2 or 3 kids, the EITC will do a lot for you. But if you get married, you'll lose a lot of your benefits. If you're childless, the EITC does very little. The EITC is a weird policy where we basically pay single moms to stay single, take a low-wage job, and then put them in a situation where they may need free help with caring for or raising their kids because the low wages do not really yield enough income to pay for day care while they are at work. To make things worse, the EITC is so complicated to file that a quarter of eligible people miss out on it, and a third of payments made are to people who weren't really eligible.

Romney's plan tackles this tangled mess of a program head on. It simplifies the 8 credit rates down to 4, it removes the favorable treatment of single parents, and it also provides more aid to childless people. This is all as it should be: punishing poor people for getting married creates a poverty trap. While we don't want to encourage people to marry just for taxes, Romney's plan doesn't create a huge marriage benefit, it just removes a currently large marriage penalty.

The larger benefit for childless people may sound odd, but it makes a lot of sense. Childless people have fewer responsibilities at home. If they are out of work and school, the odds are that their use of time isn't extremely socially valuable, so it's important to provide some work incentive there. But for parents, this calculation is more ambiguous: a parent who isn't employed may be doing the socially valuable work of raising their children. There's no reason why the government should want people with kids to be employed more than it wants childless people to be employed. 

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