By: Sen. Bob Casey
December 2, 2010
As Congress debates extending tax cuts, it must not forget those that help low-income families.
The outcome here will affect not only taxpayers but also the deficit and the nation's long-term fiscal health. Much of the tax discussion has focused on the highest earners, while scant attention has been paid to people at the other end of the spectrum. As is often the case, the lowest earners do not have a loud voice in the debate.
Republicans have already said that they do not want to extend the expanded child tax credit and other tax credits that help working families and 18 million children. The GOP opposes these cuts because they were part of the economic recovery bill -- yes, the same economic recovery bill attacked in so many midterm campaign ads. Another forgotten part of the bill is the $116 billion tax cut of up to $400 for individuals and $800 for families.
The child tax credit provides tax relief of up to $1,000 per child to working families with children. The tax credit was first passed in 1997 and was expanded last year in the economic recovery bill to increase the number of families eligible.
Under the expansion, the income threshold for the credit was lowered to $3,000 in wages. In addition, the rules were updated to allow families with two children to receive the full $1,000 per child after their first $16,333 in income. As a result, millions of previously ineligible families have received critical relief during these tough economic times.
But these expanded tax cuts will now expire if they are not extended.
Roughly 7.6 million children would lose the child tax credit, according to the Center on Budget and Policy Priorities. An additional 10.5 million would very likely see their credits reduced.
To put it in perspective, a parent earning the minimum wage in a family with two children would see the child tax credit reduced by $825 -- the equivalent of almost three weeks of pre-tax wages in that pay scale.
This is vital tax relief that helps families struggling to give their children the basics. If that argument is not convincing enough for extending these tax cuts, consider that this money will be spent immediately -- going right back into the local economy.
The child tax credit is not the only poverty-fighting tax provision in jeopardy. Enhancements to the earned-income tax credit are also set to expire.
The EITC encourages and rewards work by providing a refundable credit for working people against their payroll and income taxes. Millions of working families with annual incomes of up to $48,000 are eligible.
The recovery bill reduced the so-called marriage penalty in the EITC by increasing the income level at which it phases out for married couples. If this expanded tax relief is not extended, 6 million workers will see their EITC reduced, and 11 million children will be affected.
We just finished an election season in which political demagoguery distorted the real issues affecting real people. I hope we can now all have a thoughtful debate about this issue affecting all Americans.
As Congress debates these tax cuts, all taxpayers must be a part of the discussion.
Sen. Bob Casey (D-Pa.) is on the Children and Families Subcommittee of the Senate Health, Education, Labor and Pensions Committee.