This is how the benefits are laid out in my local state paper. See NYT graph Sizing Up the Tax Cut at http://www.nytimes.com/2003/05/29/politics/29CHIL.html ,
which I tried to send through filters but at 664KB was probably too large, eh? Two articles below, one is commentary. KWC Tax Cut’s Effects on Income: Examples of how the new tax bill will
lower taxes on individuals and married couples
Source: Deloitte & Touche Tax
Law Omits Child Credit in Low-Income Brackets
By David Firestone, NYT, May 29, 2003 @ http://www.nytimes.com/2003/05/29/politics/29CHIL.html 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 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." Excerpts:
The Tax-Cut Skeptics Back Home
By
David S. Broder, WP, Wednesday, May 28, 2003; Page A19 @ http://www.washingtonpost.com/wp-dyn/articles/A46755-2003May27.html Well, they did it. The
Republicans in Congress
cobbled together one of the strangest, least plausible tax bills in history and sent it off to President Bush, who
discovered hidden virtues in a measure whose provisions he had repeatedly
called woefully inadequate for the task of stimulating a sickly economy. You have to hope that someone somewhere
will find something in the bill that inclines him or her to speed up a purchase
or an investment.
But the start-and-stop
formulas,
with incentives phasing in and phasing out on a schedule that was dictated by the
scramble for votes -- not by any economic rationale -- make this even more of a gamble than
the Bush tax cut of 2001. That one, as we all know, was supposed to boost the
economy, but it has not prevented the loss of more than 2 million jobs. The public is plainly skeptical about the
medicine this administration keeps prescribing. The most stunning evidence of these doubts is
found in last week's NBC News-Wall Street Journal poll. Only 29 percent said they agreed with the statement that tax
cuts are the best way to increase economic growth and create jobs, while 64 percent said there are better ways to improve the
economy. Only 25 percent said
they thought the Bush tax cuts of 2001 have helped the economy, with most of
the others saying they had no real effect. When those polled were offered five
alternative ways of stimulating the current economy, the most popular option
was to give financial aid to state governments facing budget deficits. A $20
billion bailout is something Bush accepted only reluctantly, as the price of
gaining one or two Senate votes. More than six out of 10 of those surveyed
said they agreed that Bush's economic policy relies too heavily on tax cuts and
not enough on direct job creation, that it benefits the wealthy more than average Americans
and that it will increase the federal budget deficit -- which it surely will. Meanwhile, out in the real world, the hard
choices that Washington evades are being made by state legislatures and
governors. My travels took me to Oregon and Indiana in recent days, and the
fiscal situation in both states is grim. Indiana officials say they have lost
more manufacturing jobs in the past two years than any other state.
Unemployment in Oregon is at 8 percent, and tax revenue continues to fall short
of even the downward-revised estimates. …I cannot prove it,
but my latest trip added evidence that the public pessimism, which has been
blamed for the sluggish economy, is directly related to the plight of state and
local governments. People in states such as Oregon and Indiana are being
battered by daily television bulletins and newspaper headlines reporting that
the governments closest to them are being forced to take actions that threaten
their quality of life. The debates in
Washington on a new tax cut are remote and almost indecipherable. Most citizens
cannot see how they will benefit from the hodgepodge of tax changes just
enacted. But the actions being taken at the state and local levels are specific
and immediate in their consequences.
The debates in Washington on a new tax cut are remote and almost
indecipherable. Most citizens cannot see how they will benefit from the
hodgepodge of tax changes just enacted. But the actions being taken at the
state and local levels are specific and immediate in their consequences. (end of excerpts) |
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