Senators Strike Child Tax Benefits Deal

AP | 6/05/03 | MARY DALRYMPLE

[kattracks]

WASHINGTON (AP) — Unable to shake Democratic demands that minimum wage workers get the same benefit from a $1,000 child tax credit as other families, Republicans in the Senate struck an agreement to expand the benefit for low-income families and extend the benefit to more high-income couples.

"There is a deal," said a spokesman for Sen. Blanche Lincoln, D-Ark., who has been advocating the change since President Bush signed a $350 billion tax cut last month.

The strategy, designed to diffuse a growing storm over a bigger child tax credit for middle-income but not low-income families, gives both Republicans and Democrats a reason to back the bill.

Minimum wage workers would get the same rebate check, worth $400 per child, going to other families later this summer — giving Democrats a rare victory in a Republican-ruled government.

Married couples making up to $140,000 could claim the full credit for two years at the end of the bill's 10-year horizon. That change would limit the so-called "marriage penalty" in the credit and give Republicans a win.

Republicans resisted changing the law, which currently offers the credit to families who pay income tax and gives minimum wage workers — those who get enough tax benefits to see their income taxes eliminated — a partial refund.

Some Republicans have historically supported refundable tax credits, such as the much larger earned income tax credit, as a way to encourage low-wage workers to stay in the labor force and avoid welfare.

Backed by a strong push from community activists, Democrats pointed to the tax cut enacted last month as concrete proof that Republicans favor the wealthy over the poor.

"This administration is waging war on poor children," said Sen. Hillary Rodham Clinton, D-N.Y. "The reality is that they are steadily and surely trying to turn the clock back on all of the programs and supports that working families and their children need and deserve."

The legislation also reduces the five definitions of a "child" used for different tax deductions and credits to a single definition. The bill's $10 billion cost will be offset by an extension of customs fees.

[CanisMajor2002]

What's the DEAL? What did the Republicans get besides a little vaseline?

[ImpotentRage]

Yep. They folded again. The Republicans couldn't fight their way out of a paper bag.

[okkev68]

They didn't pay any taxes! Am I missing something? This is supposed to be a refund/reduction/etc... If they want to do a handout then do it through welfare benefits.

[ClearCase_guy]

Love those headline writers. As soon as I saw the headline "Senators Strike Children", I knew that we were dealing with evil Republicans. I just thought it might be a crime story.

[Recovering_Democrat]

P*****s. I hope GW vetos this piece of crap. People who don't pay taxes shouldn't get a tax benefit.

[TexasGunLover]

Why should people who don't pay income tax get a refund? That makes no sense at all and is pure socialism...

[jimt]

Yep. They folded again. The Republicans couldn't fight their way out of a paper bag.

Worth repeating.

Tax refunds for people who don't pay taxes. How conservative !

[MJY1288]

I'm losing faith in Frist, Hopefully the House ignores this givaway

[Hacksaw]

Yep. They folded again. The Republicans couldn't fight their way out of a paper bag.

Yep. They gave away a welfare benifit that they could easily have defeated.

[Moonman62]

What's the DEAL?

It's the "new tone in Washington."

[Uncle George]

The GOP got a BUNCH of help in bolstering the economy because those lower income workers SPENDDDDDD that $400 per child immediately goosing the ecomomy RIGHT NOW.

[ancient_geezer]

The bill's $10 billion cost will be offset by an extension of customs fees.

Once again smoke and mirrors strike. They give with one hand while taking with another.

Custom fees are embedded in the price of goods received as imports. Tariffs and excises, for the most part, increase the prices of goods. Guess who buys the most imported (e.g. discount) goods?

http://www.cbpp.org/taxday98.htm

CBO Estimates of Effective Federal Tax Rates for 1998
Families Ranked by Income Quintile	Individual Income Tax	Social Insurance Taxes	Corporate Income Tax	Excise & Tariff Tax	Total Federal Taxes
Lowest	-6.9%	7.8%	0.5%	2.8%	4.2%
Second	1.7%	9.9%	0.9%	1.6%	14.2%
Third	6.3%	10.8%	1.4%	1.2%	19.7%
Fourth	9.0%	11.3%	1.4%	1.0%	22.7%
Highest	16.2%	8.0%	4.6%	0.5%	29.3%
Top 10%	18.0%	6.7%	5.8%	0.4%	30.8%
Top 5%	19.7%	5.3%	7.0%	0.3%	32.3%
Top 1%	23.0%	3.0%	9.5%	0.2%	35.7%
Average for all families	11.2%	9.3%	3.0%	0.9%	24.4%
Source: Congressional Budget Office, May 15, 1997. Notes:  Pre-tax family income is the sum of wages, salaries, self-employment income, rents, taxable and non-taxable interest, dividends, realized capital gains, and all cash transfer payments. Income also includes the employer share of Social Security and federal unemployment insurance payroll taxes, and the corporate income tax. For purposes of ranking by adjusted family income (AFI), income for each family is divided by the poverty threshold for a family of that size. Quintiles contain equal numbers of people. Families with zero or negative income are excluded from the lowest income category but included in the total. Individual income taxes are distributed directly to families paying those taxes. Payroll taxes are distributed to families paying those taxes directly or indirectly through their employers. Federal excise taxes are distributed to families according to their consumption of the taxed good or service. Corporate income taxes are distributed to families according to their share of capital income.

[adam_az]

Not the new tone, the new Hue... RED.

[RightWhale]

"This administration is waging war on poor children," said Sen. Hillary Rodham Clinton, D-N.Y.

Yeah, like that's a real appropriate remark. Go on back to your Twin Oaks commune and wait for our call.

[Moonman62]

I hope GW vetos this piece of crap.

He'll veto it just like he's vetoed all the other pieces of crap, LOL!

[eboyer]

"Why should people who don't pay income tax get a refund? That makes no sense at all and is pure socialism... "

I agree. Of course lowering taxes because of dependants is also socialism.

[Ford Fairlane]

This is bull

And what really pisses me off, the only "minimum wage" workers I know are waitresses, who usually only report 10% of their tips

At the watering holes I go to, they get around $150/night in tips

Figure they work 5 shifts per week, 50 weeks per year (2 weeks vacation) that comes to $37,500/yr just in tips!

[KansasGirl]

What the chances this welfare giveaway will pass the House? No doubt W will sign it.

[kattracks]

Republicans in the Senate struck an agreement to expand the benefit for low-income families and extend the benefit to more high-income couples.

It was my understanding that the Republicans wanted this in the original bill.