House GOP Wants Poor Kids to Pay for Tax Cut Package

As you all know, the employee payroll tax cut and long-term unemployment insurance benefits will expire at the end of the month unless Congress extends them.

The Republican leadership doesn’t want a replay of the stalemate last December — very bad for the brand going into an elections season. Democrats also want an extension bill passed.

Yet the members of the bipartisan committee that’s supposed to come up with a bill are still reportedly far apart. The big sticking point is how to pay for the extensions — in other words, what budget changes should be made to offset the costs.

House Republicans tucked a nasty pay-for into their original extensions bill — a change in the Child Tax Credit that would deny refunds to taxpayers who don’t have a Social Security number.

These are mostly immigrants who aren’t authorized to work in this country. They file using an Individual Taxpayer Identification Number issued by the Treasury Department.

And file they surely do. In 2010, they collectively paid $870 million in income taxes, plus some $3.7 billion in payroll taxes* they’ll never benefit from unless they gain legal status.

Under current law, ITIN filers may claim the Child Tax Credit just as filers with Social Security numbers can.

The maximum per child credit they can get is $1,000. If the credit, plus other deductions reduces their tax liability to less than zero, they can get a portion refunded.

No big windfalls here. According to a Treasury Department audit, ITIN filers received, on average, $1,800 in 2010.

Yet the refunds made a real difference to somewhat over two million immigrant families, whose average household income was just $21,240.

A family of four with an income that low falls below the very low poverty line — hence the importance of the refunds.

For example, the average 2010 Child Tax Credit refund would pay for the family’s meals for three months, according to the U.S. Department of Agriculture’s lowest-cost meal plan. Or a couple of months rent on a two-bedroom apartment in a low-cost area.

Congressman Sam Johnson (R-TX), who introduced the bill that’s now part of the House Republicans’ pay-for, doesn’t care about any of this. “Illegal immigrants,” he says, are “bilking taxpayers … by fraudulently claiming the child tax credit.”

This is flagrant immigrant-bashing — and patently false. Parents with ITINs are claiming a credit they’re legally entitled to.

Congress chose to make them eligible because the refundable part of the Child Tax Credit — technically a separate Additional Child Tax Credit — was intended to relieve lower-income parents of some portion of their tax burden.

In this respect, we could reasonably view it as a measure to ensure some modicum of child well-being. And, as the Center on Budget and Policy Priorities reports, it does exactly that.

As many as 5.5 million children may be affected if parents with ITIN numbers can’t claim the ACTC.

All but about a million of them are U.S. citizens — though I don’t think we should start getting technical about place of birth when it comes to child poverty.

And what’s the trade-off for putting all these children at risk of poverty — or deeper poverty than they’re already in?

The estimated savings reaped by Johnson’s proposal total at most $24 billion over 10 years. This is about 16.7% of the estimated costs of the payroll tax cut and unemployment benefits extensions.

We could get to the same place, says the Center for American Progress, by imposing a paltry 0.2% surtax on the adjusted gross incomes of millionaires.

Better, I think, this minimal nick than what the New York Times rightly calls “a harder squeeze on the poor.”

* This is based on an estimate of the payroll taxes ITIN filers generated. I’ve factored out the amount that employers paid.

4 Responses to House GOP Wants Poor Kids to Pay for Tax Cut Package

  1. […] when their parents aren’t. (Huffington Post, Fox News, New York Times, Philadelphia Inquirer, Poverty & Policy, Wisconsin Council on Children and […]

  2. […] House Republicans had had their way, refunds that help support more than five million low-income children would have been part of the […]

  3. […] and Means dusted off a proposal that earlier surfaced a way to offset some of the costs of extending the employee payroll tax cut […]

  4. […] Kelly Ayottte (R-NH) fished an old proposal out of a file and put some gloss on it. Her amendment, as originally proposed, would deny the […]

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