WASHINGTON,
D.C. – U.S. Representative Jan Schakowsky (D-IL) said that President Bush
signed the tax bill even after a change in the eleventh hour by Republicans
that prevents millions of low-income families from receiving the increased
child tax credit.
According
to a front-page story in today’s edition of the New York Times,
“…{m}ost families with incomes from $10,500 to $26,625 will not benefit.
The Center on Budget and
Policy Priorities, a liberal group, says those families include 11.9
million children, or one of every six children under 17.”
Below
is the text of the New York Times story:
Tax
Law Omits Child Credit in Low-Income Brackets
New
York Times
By
DAVID FIRESTONE
A last-minute revision by House and Senate leaders
in the tax bill that President Bush signed today will prevent millions
of minimum-wage families from receiving the increased child credit that
is in the measure, say Congressional officials and outside groups.
Most taxpayers will receive a $400-a-child
check in the mail this summer as a result of the law, which raises the
child tax credit, to $1,000 from $600. It had been clear from the beginning
that the wealthiest families would not receive the credit, which is intended
to phase out at high incomes.
But after studying the bill approved on Friday,
liberal and child advocacy groups discovered that a different group of
families would also not benefit from the $400 increase -- families who
make just above the minimum wage.
Because of the formula for calculating the
credit, most families with incomes from $10,500 to $26,625 will not benefit.
The Center on Budget and Policy Priorities, a liberal group, says those
families include 11.9 million children, or one of every six children under
17.
"I don't know why they would cut that out of
the bill," said Senator Blanche Lincoln, the Arkansas Democrat who persuaded
the full Senate to send the credit to many more low income families before
the provision was dropped in conference. "These are the people who need
it the most and who will spend it the most. These are the people who buy
the blue jeans and the detergent and who will stimulate the economy with
their spending."
Ms. Lincoln noted that nearly half of all taxpayers
in her state had adjusted gross incomes that were less than $20,000.
Families with incomes lower than $10,500 will
also not receive the refund checks. But under the 2001 tax revision, they
would not have been eligible for either the $600 or the $1,000 credits
because they do not pay federal taxes. Proposals to give them the credits
failed on the House and Senate floors on party-line votes.
The Senate provision that did pass was intended
to help those families making $10,500 to $26,625 who do pay federal taxes
and could have taken all or part of the $600 credit. The provision, which
would have cost $3.5 billion, would have allowed those families to receive
some or all of the extra $400 in the new law.
Most families with children who make about
$30,000 or less are also eligible for the earned income credit, which the
law does not not change. In addition, the law has a few other benefits
for low income earners, like expanding the lowest tax bracket and a temporary
reduction in the penalty on two-income couples.
Several centrist senators worked hard to make
the child credit fully refundable for all low income families, and the
full Senate voted this month to include a provision that would have included
the minimum-wage families. But the provision was dropped in the House-Senate
conference, where tax writers spent days trying to cram many tax cuts --
most prominently, cuts in the taxes on stock dividends and capital gains
-- into a bill that the Senate said could not be larger than $350 billion.
House Republicans, who acknowledged the gap
on the child credit, blamed the Senate for insisting on its $350 billion
cap, saying the low-income families could have been covered had the Senate
been more flexible.
A spokeswoman for the Republicans on the House
Ways and Means Committee, Christin Tinsworth, noted that the provision
was included in an agreement reached last week by Representative Bill Thomas,
Republican of California, the committee chairman, and Senator Charles E.
Grassley, Republican of Iowa, chairman of the Senate Finance Committee.
That agreement would have cost $380 billion,
but it fell apart when an important swing senator, George V. Voinovich,
Republican of Ohio, said he could not approve any bill that exceeded $350
billion. To satisfy him and the Senate, Ms. Tinsworth said, the child credit
provision was dropped, along with other costs.
"The Senate preferred to have $20 billion in
state aid," she said. "But when we had to squeeze it all to $350 billion,
they weren't talking about the child credits. This bill does a lot to help
people who need help. But its primary purpose was to generate jobs. Apparently,
whatever we do is not going to be enough for some segments of the population."
But Democrats and children's advocacy groups
said the Republican demand for large cuts in the dividend tax, which they
said benefits primarily wealthy taxpayers, pushed away the credit from
low income families.
"If we were going to have a tax cut to give
$1,000 to all these other kids, there's no reason not to include these
kids, too," said David Harris, president of the Children's Research and
Education Institute. "Their families are working and playing by the rules
and are left out, though it would not have cost too much to include them."
A spokeswoman for Mr. Voinovich said the senator
would have been happy to extend the child credits, but believed that the
entire package should not pass $350 billion. The tax writers were free
to reduce the dividend tax cut, noted the spokeswoman, Marcie Ridgway.
The gap in the number of families who receive
the child credit occurs because of how the formula was arranged in 2001.
Congress decided then to give refunds of the credit to low income families,
but just to a maximum of 10 percent of the amount they made over $10,000,
or a refund of $600, whichever was lower. The $10,000 amount was indexed
to inflation and is now $10,500.
When the credit was raised to $1,000, many
families could not qualify for the extra amount, because the 10 percent
maximum still limited them. Ms. Lincoln proposed raising the formula to
15 percent, which would have covered the increase in the credit for most
of those families. Her proposal made it through the Senate Finance Committee,
but later she voted against the full cut.
Because her vote and those of other supporters
were not necessary for final passage, Republicans knew they could drop
the provision without hurting the bill's chances in the Senate.
"I guess this shows us what our priorities
are," Ms. Lincoln said. "I think this tax bill is very irresponsible in
the way it treats families." |