Child tax credit expands to a decade

WASHINGTON -- The House voted Thursday to extend $1,000 child tax credits through the rest of the decade, leaving uncertainty over whether low-income families will cash in on rebates going out to other households this summer.

The 224-201 vote on the package of $82 billion in new tax cuts extends the $1,000 child tax credit to 2010 and makes the benefit available to more low-income families and higher-income married couples. It also sets up a confrontation with the Senate, which a week ago passed a much smaller bill to allow 6.5 million low-wage households to qualify for the checks of up to $400 per child that will be mailed to middle-income parents.

Democrats said House Republicans omitted instructions telling the Treasury Department to send child credit refunds this year to low-income families, leaving those families to claim the bigger credit next year when they file their tax returns. "This is one of the most cynical and hypocritical moves I have ever seen," said Charles Rangel of New York, the top Democrat on the Ways and Means Committee.

House Republicans said the bill doesn't block the Treasury Department from issuing checks to low-income families later this year, leaving open the possibility that the final version negotiated between the House and Senate will include rebates for those families this fall.

"We intend to get these checks out as quickly as possible," said John Feehery, spokesman for House Speaker J. Dennis Hastert, R-Ill.

House Ways and Means Committee chairman Bill Thomas, R-Calif., said that when the House and Senate meet to hammer out their differences, "obviously that would be one of the issues."

Thomas criticized Democrats for ignoring the bill's benefits for all working families with children. "Sadly, rather than focusing on the merits of this legislation, some have used this as a political opportunity," he said.

A House Ways and Means Committee aide, speaking on condition of anonymity, said the committee made a practical decision not to write in instructions for Treasury to send advance refunds and allow low-income families to claim the bigger refund in 2004. They did not want to delay checks already scheduled to go to 25 million families, and a second round of checks would be costly and burdensome to the Internal Revenue Service.

The House also removed from a Senate-passed bill language that would have enabled families of servicemen and servicewomen who served in the war with Iraq to claim bigger child tax credits.

No tax payments

Republicans said the low-income families covered in the legislation already pay no income taxes. "We're turning our tax code into a welfare system," said Spencer Bachus, R-Ala.

The White House said Thursday it wanted the House and Senate to "quickly resolve their differences." But Republicans in the two chambers have veered far apart in their response to the political pressure for an expansion of child credits to more low-income families.

Democrats said the House GOP's changes will trigger endless negotiations and kill any chance that low-income families would get checks similar to those going this summer to 25 million middle-income parents.

"I don't think it's ever going to happen," said House Minority Leader Nancy Pelosi, D-Calif.

The pressure started after President Bush signed a tax cut that increased the $600 child tax credit to $1,000. It authorized the Treasury Department to send advance refunds worth up to $400 per child to families who qualify for the bigger credit. The checks will start to go out at the end of July.

Incomes too small

But families making between $10,500 and $27,000 do not pay enough income taxes to take advantage of the bigger credit and would not get a refund check this summer.

The Senate responded to the omission with a quick fix that would send rebates to low-income families later this year. Low-income families could claim payments worth 15 percent of their income over $10,500, up to $1,000 per child. The Treasury Department said it couldn't send a second round of checks until September.

The House rejected the Senate's solution and drafted a bill that includes the bigger credits for low-income workers but does not specifically provide for the families to get rebate checks this year.

The House bill contains a broad expansion of the child credit, carrying the increase to $1,000 through the end of the decade. The credit would drop to $700 in 2006 if left unchanged.

The House also gives wealthier married couples a bigger credit, allowing couples who make $150,000 or more to claim part of the credit. It currently starts to disappear for couples who make $110,000 or more.

The vastly different approaches taken by the House and Senate set up a fight between the party's deficit watchdogs and its most ardent tax-cutters.

Moderates in the House and Senate said they prefer the Senate's small bill, which costs the Treasury nothing because the tax cuts are paid for with an extension of customs fees. The White House also said it would accept the Senate's bill.

"They're not exactly lobbying particularly hard," said moderate Rep. Michael Castle, R-Del.