A new study estimates that almost 30 percent of children potentially eligible for the child tax credit live in households with incomes too low to qualify for the entire $1,000 credit.

Published by the nonpartisan Tax Policy Center, the study used the current tax credit rules and 2002 household income data to come up with their estimates. They determined that the families of 10 million low-income children wouldn't have received any credit in 2002, while the families of another 10 million would have received only a partial credit because of insufficient household income.

"As expected, most CTC benefits go to families with incomes between $20,000 and $200,000," the report says. The credit's largest beneficiaries have incomes between $75,000 and $100,000, receiving an average CTC of $605, it says.

The largest federal cash assistance program for children, the credit provides over $46 billion in subsidies to families with children every year, according to the Joint Committee on Taxation -- equal to the entire federal budget for children and family services programs (excluding health care) administered by the Department of Health and Human Services.

The credit was originally enacted as part of the Taxpayer Relief Act of 1997, providing a $500 tax credit for dependent children under the age of 17 with eligibility phased out at high income levels. The credit was also of little or no value to low-income households because few had any income tax liability, which the study says made the credit a middle-class entitlement program. Laws passed in 2001 doubled the credit to $1,000 and expanded the credit's refundability, making the credit more valuable to many lower-income families.

The study examines the distribution of the credit in 2005 by income and disparities along lines of race or ethnicity. The full report can be accessed from http://taxpolicycenter.org/home/

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