Article

Child Tax Credit

From the American Progress Action Fund: A Film by Robert Greenwald and Richard Ray Perez, Left Out: The Children and Families Left Behind by the President’s Tax Proposal. American parents describe what this missing tax credit would mean to their families.

The Problem.

In 2001, Congress passed a number of tax cuts including a doubling of the amount of the child tax credit that most families receive (from $500 to $1,000) over time.

This benefit also provided a limited expansion of child tax credits for low-income families.

In early 2003, President Bush asked Congress to speed up many of the 2001 tax cuts including acceleration the child credit. 

Inexplicably, the president’s proposal didn’t speed up expansion of the child credit at levels that benefit lower income families.

That means that while millions of children from middle and upper income families benefit from the $1,000 child tax credit, more than 20 million of our nation’s poorest children receive less than full benefit from it, and 8 million children receive NO benefit at all.

Senators from both parties passed an amendment to the 2003 tax bill that would have fixed this but Republican House leaders forced its elimination.  

Soon after the bill was enacted, Sens. Blanche Lincoln, Olympia Snowe and others introduced another bill and again attempted to fix the problem. Their bill, which passed the Senate by a vote of 94-2, sped up child tax credit relief for low income working families and fixed a glitch in current law to protect military families with members serving in combat zones.

At that time, President Bush expressed concern for these families and vowed to sign the bill. However, when the bill was presented to the House, the leadership again killed it.  The president did not step in to press the issue forward.

Now, with the release of his 2005 budget, the president had another opportunity to show his support for these poor working families by accelerating the credit to low income families. Yet again, they were excluded.

Who is affected?

Who are the families that continue to be left out?  Families earning between $10,500 and $26,635 per year don’t receive any accelerated child tax benefit. Children of nearly 200,000 military families (many with members serving in Iraq and other combat zones), are ineligible for the child tax credit. These families pay significant payroll and state and local taxes and struggle to make ends meet.

  • Example 1 – A single mom with one child, working full-time to put food on the table, buy clothes for her daughter, and ensure adequate childcare while she is at work. She makes $15,000 a year. She pays $1,150 per year in federal payroll taxes, as well as property taxes, excise taxes and sales taxes. She would have received a $225 check in her mailbox had the Senate bill been enacted last year.
  • Example 2 – A Marine Gunnery Sergeant with eight years of service who is stationed in Iraq. He has two children and receives an annual salary of $32,015 and hazardous duty pay of $150 per month. Under the Senate bill, he would have been eligible for a full $1,000 child credit for each of his children.

Raising children is a most important and expensive undertaking. The face of our country tomorrow will be shaped by how well we raise our kids today. Political leaders have recognized the need to support families by defraying the costs of providing for children. But denying support to working families with the lowest incomes and greatest need while supporting children of middle and upper income families violates a fundamental principle of fairness.