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News :: Children |
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Tax Law Omits Child Credit In Low-Income Brackets |
Current rating: 0 |
by David Firestone (NY Times) via rporter
Email: rporter (nospam) newtonbigelow.com (verified) |
29 May 2003
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Last minute changes in the new tax law will prohibit low-income families from receiving a tax credit. |
WASHINGTON, May 28 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."
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Comments
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Tim Johnson Votes To Screw The Poor Again |
by ML
(No verified email address) |
Current rating: 3
29 May 2003
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"Proposals to give them the credits failed on the House and Senate floors on party-line votes."
I guess that means that US Rep. Tim Johnson voted to screw the working poor again. This can be added to his vote in favor of the overall tax plan to send aid primarily to the wealthy and his vote to cut veteran's health service funding as one more example of his promotion of the interests of his circle of rich cronies instead of the majority of his district. |
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Caught In The Squeeze |
by Bob Herbert
(No verified email address) |
Current rating: 0
29 May 2003
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One of the things President Bush knows best is when to turn on the klieg lights, and when to keep them off.
On Tuesday, with no fanfare, he signed a bill increasing the federal debt limit by nearly a trillion dollars. You don't want a lot of coverage when you're mortgaging the future.
But yesterday it was high-fives all around as Mr. Bush signed the third-largest tax cut in history at a grand ceremony in the East Room of the White House.
I suppose if your income is large enough, there is every reason to celebrate. After all, the tax cut could save Dick Cheney $100,000 a year, or more.
But given the economic realities in the U.S. right now, I thought the East Room celebration was in poor taste. The enormous tax-cut package (which is coupled with budget deficits that are lunging toward infinity) is a stunning example of Mr. Bush's indifference to the deepening plight of working people.
The economy has lost more than a half-million jobs already this year, and well over 2 million since payrolls peaked two years ago. More than 8.7 million American men and women are officially counted as unemployed. And that figure is artificially low because it does not count those who have become discouraged and stopped looking for work.
The fallout from the continued hemorrhaging of jobs and the swollen ranks of the unemployed is spreading. The Times had an article two weeks ago about college seniors' putting their dreams on hold because they're graduating into the worst hiring slump in 20 years.
"We definitely picked the wrong time to be graduating from college," said Morgan Bushey, a 21-year-old student at the University of North Carolina. She said she planned to go to France, where she would make about $200 a week teaching English. T
he jobs squeeze has other effects. "There's been this notion along the way that if you at least kept your job, you'd be O.K.," said Jared Bernstein, an economist with the Economic Policy Institute in Washington. "But now this persistent unemployment is taking a toll on the wages of those who are still working."
Wages, when adjusted for inflation, are falling for workers across the board. An analysis of government data by Mr. Bernstein and Lawrence Mishel, the institute's president, found that the median weekly paycheck fell 1.4 percent over the past year. All the pay grades above and below the median are also sliding backward. White-collar, blue-collar workers in all pay grades are taking a hit. Even wage earners in the highest category have seen their pay slip by 1.4 percent.
"When unemployment got down to 4 percent in the late-1990's, you had broad-based wage growth and it was the first time we'd seen that in decades," said Mr. Bernstein. "That's gone."
The president is not calling his tax package the "Windfall for the Wealthy" act, which is what it is. He calls it the "Jobs and Growth" act, which is what it's not.
He would like us to believe that "with tax relief will come more jobs for the American people." But that's what he said in the last round of tax cuts, and the American people are still waiting.
In fact, the wait is becoming interminable for some. More and more Americans are joining the ranks of the long-term unemployed, those who are out of work for six months or more. A joint study by the National Employment Law Project and the Economic Policy Institute called long-term unemployment "the scourge of a declining economy," and noted that it is taking its greatest toll among those who have traditionally felt economically secure.
"The reality," said the study, "is that the long-term unemployed are better educated, older and more likely to be professional workers."
What the economy needs is a real stimulus that will create real jobs, not an irresponsible package of tax cuts that will inflate the portfolios of the very wealthy while starving the government of the money needed to pay for essential services and to maintain a safety net for the nation's most vulnerable citizens.
We are closing schools and libraries in America, and withholding lifesaving drugs and medical treatment from the poor. The middle class is struggling ever harder to make ends meet, and reshaping its dreams of the future.
In Washington, they're celebrating.
Copyright 2003 The New York Times Company
http://www.nytimes.com |
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Re: Tax Law Omits Child Credit In Low-Income Brackets |
by Jack Ryan
(No verified email address) |
Current rating: -3
29 May 2003
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These people pay no income now. How in the world would they expect to get anything back?
Jack |
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Better Check Your Facts, Jack |
by Working Stiff
(No verified email address) |
Current rating: 6
29 May 2003
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As someone who has been in the workforce for over a decade, I can tell you that folks in the $10,000 - $20,000 yearly income bracket pay plenty of income tax. Contrary to popular belief, most of that money is not refunded. Anyone who ever had to work for a living would tell you the same thing. Next time, do a little checking before you run your mouth. |
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Re: Tax Law Omits Child Credit In Low-Income Brackets |
by Jack Ryan
(No verified email address) |
Current rating: -2
31 May 2003
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Dear Thinking Stiff,
If you have worked for the last 10 years and are still making between $ 10,000 and $ 20,000 a year, I would suggest that you attempt to try and find a new vocation. The fact is, that the top 50% of all wage earners pay 100% of the income tax. The top 10% pay over 70% of the total tax burden.
Despite what you say, a family earning under 25,000/year will generally have about $2000.00 withheld and get back about $ 5,000 grand from the government and the really hard working people who actually earn the money. This windfall is compliments of the earn income tax credit which is nothing more than lump sum welfare.
So spare me with your lecture and at least try to use a fact once in while.
Take Care,
Jack |
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