> From: [EMAIL PROTECTED] (rakesh bhandari)
> Subject: [PEN-L:11449] Re: Child tax credit
> As it has been suggested to me privately that I have misunderstood this
> child tax credit, I reproduce what I read in the WSJ:
>
> "Neither Mr. Clinton nor Congressional Republicans are interested in
> subsidizing the very poor. Families who make less than $19,000 or so
> wouldn't benefit from White House, Senate or House plans, although they
> would under alternatives offered by Democratic leaders of the House and
> Senate. And all three bills would give the $500-a-child credit to families
> with children smack in the middle of the middle class whose income,
> according to the latest Census Bureau data is about $40,000 a year. (About
> one sixth of the 37 families with children have incomes below $15,000 and
> one sixth above $75,000.)
>
> "The big issue is whether to give any money to working families with
> incomes bewtween roughly $19,000 and $28,000. Mr Clinton would, the House
> wouldn't and the Senate is in between. In a recent interview, Mr Gingrich
> acknowledged the president "may well get something" in the end 'because we
> want the bill signed.'"WSJ, 23 July, 1997, A20
>
> Now if there is going to be a child tax credit, why should the really poor
> not get it? Because they already enjoy the EITC?
Of course all children of low-income *should* benefit
from a credit. That isn't what's at issue.
The credit only applies logically in the first place to
children in families who file under the income tax.
If it applied to all, it wouldn't be a tax credit. It would
be a childrens' allowance, a great thing but not what
is in play right now.
A tax credit in simplest terms offsets a tax liability.
The EITC blurs that definition by being "refundable,"
meaning if the credit exceeds your tax liability
the govt mails you a check for the difference. The
struggle in this tax bill was for the kiddie-credit to
have a similar feature. Clinton was better on this
than the G.O.P., as the article points out, though
not as good as the House Democrats. So your
implicit complaint that the tax credit is not a
childrens' allowance is analogous to criticizing
a bridge because it is not a school bus.
Moreover, your equation of Clinton and the G.O.P.
on this issue was overdrawn. There's enough
other points of similarity to slam Clinton (e.g.,
see "The Good for Nothing Budget," an EPI
Issue Brief), but this wasn't one of them. The danger
of glossing over the difference is indifference to the choice
between Clinton's tax bill and the Republicans. Neither is great,
to say the least, but they aren't the same.
Is it too much to strive for a little precision in our
criticism?
> Well, others who will enjoy this kiddie tax credit also enjoy tax breaks as
> well (eg, mortgage deductions). It cannot be because the really poor
True but irrelevant.
> already enjoy a tax break (the EITC necessary for their reproduction as
> wage slaves after all) that the "really poor" are being punished by
> disqualification for this child tax credit. Clinton is just using tax
> policy against those whom he doesn't have the guts to call openly "the
> unfit". As a further example, why is he giving a tax break to families for
> kids in college for which this tax break poor families will *not* qualify
> *even* if family members are in college, much less if they are not.
What Clinton really wants is his lousy budget deal. He isn't
thinking about the "reproduction of labor," for which the tax credit
or its lack are irrelevant. He's doing the education credit in a
misguided but more-or-less honest effort to get something
that can be classified as "public investment" accomplished.
The right time to be screaming about this was last year during
the debate on welfare reform. It's a little late for that now,
though I'm sure the opportunity will return.
Cheers,
MBS
"People say I'm arrogant, but I know better."
-- John Sununu
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Max B. Sawicky Economic Policy Institute
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