A cost-benefit analysis released today by Scioto Analysis finds that Minnesota's Child Tax Credit is projected to generate over $930 million in present benefits to the state. Minnesota’s Child Tax Credit is one of the most generous state Child Tax Credits in the country, providing $1,750 in benefits to low-income families with qualifying children.
“Child tax credits do so much more than just giving resources to families that need them, they are significant investments in the future state economy” said policy analyst Michael Hartnett. “the decreased pressure on the social safety net going forward more than pays for the upfront costs of this program.”
Key Findings:
Increased Future Earnings: The largest benefit, estimated at $670 million, comes from projected increases in the future earnings of children receiving the tax credit. The added resources from the tax credit support better educational opportunities and health outcomes, leading to higher lifetime earnings.
Crime Reduction: The tax credit is expected to prevent over $460 million in future criminal justice and victim costs by reducing the likelihood of future crime. This benefit accrues to the whole state, meaning that even those who don’t receive the tax transfer still experience long term gains.
Excess tax burden: Funding the program to make up lost tax revenue costs the state economy around $180 million.
A Monte Carlo simulation of all the possible outcomes finds that about 86% of the time, the child tax credit will have benefits that outweigh costs. The range of likely outcomes is heavily right-skewed, meaning that there are more extreme positive outcomes than there are extreme negative outcomes. High-end estimates of the value of the child tax credit reach $2 billion in annual net benefits.