Senate extends $400 child credit to low-income families

Friday, June 6, 2003

WASHINGTON -- The Senate voted Thursday to give some low-income families a check worth up to $400 for each of their children, as Republicans buckled under demands from Democrats to make more low-wage workers eligible for an increased child tax credit.

"These are hardworking couples who put in a hard day's work," said Democrat Blanche Lincoln of Arkansas, who pressured Republicans to revisit the tax cut President Bush signed in May. "They're trying desperately to raise a family."

The Senate's overwhelming 94-2 vote in favor of the tax package, which expands the child credit for low-income workers and high-income married couples, underscored the political momentum building behind the issue. The only two senators to oppose the legislation were Republicans James Inhofe and Don Nickles, both of Oklahoma.

The tax package must reach the president's desk by June 23 for low-income families to get checks along with 25 million middle-income households already slated to get an advance refund of the child tax credit, just temporarily increased to $1,000.

"I'd like to see all of these folks included when the round of checks are sent out this summer," said Senate Finance Committee Chairman Charles Grassley, R-Iowa.

But before workers can count on the money, the House must pass the bill. House Republican leaders -- cool to sending payments to workers who pay no income taxes -- have not said whether they will consider the legislation.

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.

But this year's debate saw Republicans arguing that tax cuts should lift the burden on those who pay income taxes. They said the 6.5 million families that make between $10,500 and roughly $27,000, who will now be eligible for a bigger child tax credit, already get their income taxes and much of their payroll taxes refunded through the earned income tax credit.

"This notion that we are not taking care of the poor working families of this country is completely false," said House Majority Leader Tom DeLay, R-Texas.

Playing favorites

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 bill allows low-income families to get a refund worth 15 percent of their income in excess of $10,500. A full-time worker making minimum wage earns $10,300 a year.

Soldiers in combat zones who are exempt from income taxes will also be able to claim the credit.

In addition to helping low-wage workers, the bill would also increase the amount married couples can earn before the credit starts to decrease, a priority of Republicans. In 2008 and 2009, married couples making up to $115,000 can claim the full credit. In 2010, couples who make up to $150,000 can claim the full credit. At higher incomes, married couples could claim a partial credit.

All families will see the credit drop from $1,000 to $700 in 2006 unless Congress acts to make the increase permanent.

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.

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