Clinton Unveils Anti-Poverty Reforms to Child Tax Credit

October 17, 2016

Clinton firmed up her agenda for children and families last week with a plan to reform the Child Tax Credit. Her announcement headlines it as a “middle class tax cut,” but it would deliver needed income support to poor and near-poor families with children, especially the very young.

We can see that Clinton attends to progressive advocates and members of Congress who attend to them. Basically, she’s borrowed from bills previously introduced in Congress, which borrowed from a proposal by the Center for American Progress.

They all would make the CTC available to working parents who can’t claim it now and deliver the greatest benefits to those with children in their early years.

CAP argues that those families’ needs are greatest — a combination of relatively low earnings, student debt and the costs of necessary things for babies, e.g., cribs, diapers.

One might add the costs of child care, which are extraordinarily high for infants and toddlers. They’re probably a bigger stretch for parents who’ve no student debt because they, at best, finished high school.

Low earnings alone surely justify the inclusion of a more robust CTC in an anti-poverty agenda — optimally, one that would boost the credit for all minor-age children.

The poverty rate for children under six was 17.3% last year, according to the Center for Budget and Policy Priorities. But it was 15.6% for older children. Their parents would fare better under Clinton’s plan too, though not as much better.

Her plan would do three major things. First, it would make the CTC available from the first dollar earned, rather than the first after $3,000 — a change that progressives have advocated for years.

Second, it would selectively increase the rate at which the CTC phases in. It’s now 15% of earnings over the threshold to claim it, up to a $1,000 per child maximum. Clinton would triple the rate for children under five.

And third, she’d double the maximum parents could claim for those kids.

So, for example, a single mother who has an infant and a toddler and works full time at the federal minimum wage would get $4,000, instead of about $1,800, i.e., less than the current full credit for the kids.

Now, the CTC, as you may know, is a refundable credit, like the heftier Earned Income Tax Credit. So if a parent owes less than zero when she claims it, plus deductions and the EITC, she gets a check (or the equivalent) from the Internal Revenue Service.

The refunds help account for the credit’s anti-poverty impact — and its potential. The CTC lifted about 3.1 million people, including some 1.7 million children over the poverty threshold in 2013, the Center on Budget reports.

An additional 13.7 million, including about 6.8 million children were less poor than they’d have otherwise been.

Clinton’s proposals would lift about 1.5 million more people out of poverty, the Center estimates. This figure includes roughly 400,000 children under five.

And about 5.2 million people, including 1.1 million young children in deep poverty, i.e., at or below half the applicable threshold, would also gain income. Still poor, but less so.

Not only poor families would benefit. Eligibility for the CTC would apparently plateau at the same maximum adjusted gross income and then phase out at the rate current law sets.

So a single parent with two children could get some tax reduction until her income exceeded about $115,000. A cut-off about $45,000 higher if she married and filed jointly.

The CTC, however, benefits primarily lower and moderate-income working families. It still would. But the Center for Tax Justice finds that eliminating the threshold and tripling the phase-in rate would deliver the greatest benefits to families in the bottom fifth.

The Center on Budget’s analysis indicates a tilt toward families way down in that fifth. About 77% of the people the CTC expansions would benefit are poor, according to its estimates.

The reforms would cost the federal government an estimated $208.7 billion over the first 10 years, if they became law this year, which, of course, they won’t.

The revenue losses would be a miniscule fraction of the federal budget, which was somewhere around $3.9 trillion for just last fiscal year.

And Clinton’s total tax plan would offset the CTC reforms many times over. The Tax Policy Center estimates revenue gains at about $1.4 trillion over the same 10 years its CTC estimate covers. More than 90% of the increase would come from the very wealthiest households.

So we’re highly unlikely to see the whole package pass in the next Congress. But say — oh, let’s say — that Clinton becomes our next President.

Might we see the CTC expansions or something like? Dylan Matthews at Vox thinks not, unless the Democrats win a majority in the House. Jordan Weissman at Slate views all Clinton’s tax proposals as DOA unless Democrats gain control of the Senate too.

I’m inclined to feel more hopeful. Democrats got the current CTC threshold converted from temporary (and expiring) to permanent as part of a big, urgently-needed budget deal.

That won’t be the last near-crisis because Congress tends to put off politically difficult decisions until the last minute. And a whole lot of decisions have become politically difficult as rifts within, as well as between the parties have grown.

Grasping at straws, it may seem. But I do think the CTC expansions have a chance. And I hope that when an actual bill emerges, they provide more relief for families with older children, as Clinton suggests they might.


Child Tax Credit Lifts Kids Out of Poverty, But Too Limited for Big Impact

July 25, 2016

Children are the single poorest age group in our country. More than one in five live in poverty, according to the Census Bureau’s latest report based on its official measure. The better measure still shows a 16.7% child poverty rate.

What these rates tell us, among other things, is that a great many parents don’t have enough money to pay for even their children’s basic needs. Nor their own, since the measures reflect household income.

We don’t have a good fix on how much they’d need. The U.S. Department of Agriculture does, however, provide rough estimates, based on a survey of what parents actually spend. Unfortunately, we get only a crude family income breakout — all families below $61,530 lumped together.

That said, USDA reports that the costs of raising a child from birth to age 18 totaled $164,160 three years ago for a single parent with one child in the lowest income bracket. Costs mount as children grow up — the total, of course, but also by their age.

Infants, on average, cost the least. But even they set low and moderate-income single parents back an estimated $10,436 in their first year. A single mother who worked full time, year round at the federal minimum wage would have only about $3,700 of her take-home pay left for all other expenses.

We do, of course, have publicly-funded programs to supplement what parents can afford to spend out of their own earnings, if any. Some are uniquely for children — the Children’s Health Insurance Program, for example, WIC and pre-college public education. Far more include both them and adults in the household.

Rolling the two kinds together, First Focus reports that this year’s federal children’s budget accounts for 7.83% of total spending — this after factoring out parents’ share of safety net benefits like SNAP (food stamps) and housing assistance.

So we’re investing relatively little in the well-being and future prospects of the next generation. No news here, though the fact that children’s share of spending has shrunk since 2010 may be. It wasn’t all that big a share then, however — just 8.45%.

What the First Focus analysis doesn’t capture is federal spending through the tax code, rather than annual budgets. The Urban Institute’s Kids Share analyses do.

The latest puts total federal spending on children at 10% of the 2014 total — roughly $463 billion. Two-fifths of that reflects tax deductions and credits for families with children.

Drilling down further, we find $53.6 billion in refunds from the Earned Income Tax Credit, i.e., money parents receive when the credit they’re entitled to, plus other gross income adjustments exceeds what they owe.

The refundable part of the Child Tax Credit was less than half that — $21.5 billion. And unlike the EITC, it was less than paid out in 2013.

The refundable tax credits together lifted roughly 10.6 million people, including 5.6 million children over the poverty threshold and made significantly more less poor than they would otherwise have been.

But clearly the EITC did most of the lifting, accounting for all but 1.7 million of the not-poor, but still low-income children. Several major reasons for this.

First off, not all parents with earned income can claim the refundable CTC. They have to have made at least $3,000 during the year, either together, if they file jointly, or alone if they’re single. The EITC, by contrast, kicks in at the first dollar of earned income.

Second, the tax credit for most working parents is capped at $1,000 per child. (No credit — and thus no potential refund — for very high-earners, who won’t concern us here.) Third, another cap limits per-child refunds to 15% of earned income above the threshold for claiming it.

These several constraints mean considerably lower tax benefits. A single parent with one child, for example, could receive $3,359 from the EITC this year. And the benefit is annually adjusted to keep pace with inflation, while the CTC isn’t.

Political leaders of various stripes have teed up proposals for boosting the CTC. Then-Presidential hopeful Marco Rubio, for example, included a $2,500 supplement to the current maximum in his tax plan.

That, said the Center for American Progress, among others, would have benefited higher-income families, while failing to protect low-income families from losing all or part of their benefits, as they would have if Congress hadn’t subsequently made the Recovery Act improvements permanent.

The House Republicans’ tax plan calls for increasing the CTC to $1,500 (presumably per child) and raising the maximum income eligibility for married couples.

The refundable part would still be capped at $1,000, however. And filers without Social Security numbers couldn’t claim it — a not-so-subtle attack on undocumented workers and their children that Republicans have repeatedly made.

Though the plan may seem more friendly to other parents with children, it actually isn’t because it would eliminate the exemption for children — $4,000 per child this year, except for very high-earners. So what the right hand giveth, the far-right hand taketh away.

Democrats have also seized on the CTC as an opportunity to strengthen support for working families. We’ve got several proposals languishing in Congress now. And we may see the issue develop in the last round of this seemingly endless Presidential campaign.

Too much for me to cover here. So I’ll reserve the more progressive approaches for a separate post. Will just note here that making child raising costs more affordable seems to have gained traction over the last several years.

Whether we’ll actually see tax credit changes will, like so many things, depend on what happens in November. Now, if poor and near-poor children could vote ….



Congress Does Another Pretty Good Thing

December 21, 2015

No, I’m not referring to the budget Congress just passed. Better than a government shutdown, of course — or what we would have had if Congress hadn’t lifted the spending caps. But more a relief from what could have been than a pretty good thing.

It’s rather the package that will extend expiring tax breaks — most, as usual, with a new end date, but some permanently, i.e., unless and until Congress repeals or changes them.

Many converted from nominally temporary to permanent will benefit businesses or well-off individuals. But poor and near-poor families will also benefit because the improved Earned Income Tax Credit and Child Tax Credit become as permanent as the rest.

Here, briefly, is what this means as a practical matter — and, also briefly, why the bill isn’t plain good, but probably as good as it could be under the circumstances.

More Spendable Income for Working Families

The Recovery Act made two changes in the EITC that benefit working families. It reduced the so-called marriage penalty, i.e., the lower benefit some married couples receive when both have earned income. And it added a higher benefit for those with three or more children.

The Recovery Act also reduced the minimum wage income required to claim the refundable part of the CTC from what was then $12,500 to $3,000, enabling many more low-income parents to get a modest budget boost at tax time.

All these improvements would have expired in 2017. Some 16.4 million people would have fallen into poverty or deeper poverty — mostly the latter, according to the Center on Budget and Policy Priorities’ latest estimates.

And results would have worsened in future years because the former permanent law linked the threshold for claiming the CTC to consumer price inflation.

Urgent Though Not Expiring at Year’s End

One might think that Congress could have waited to deal with the improvements — as it tends to do with extenders. But excluding them from the package would have made preserving them later much tougher.

Because the more tax breaks made permanent, the greater the chance that the improvements would have hung out there alone. Republicans would then have insisted they be fully paid for, i.e., offset by spending cuts or revenue raisers.

But they wouldn’t go for the latter. So they could have forced a choice between a rollback to the pre-improved tax credits and spending cuts.

This might not have proved the only hurdle. As a recent letter from major advocacy organizations warned, the improvements could “essentially be held hostage for other deleterious policy changes.”

Anyone who’s been reading about the policy riders Republicans tried to hang onto the budget bill has some notion of how supporters of the improvements might find those changes too high a price to pay.

Downside for Some Immigrant Families

To no one’s surprise, the anti-immigrant sentiment among some Republicans infiltrated the tax bill negotiations.

One proposal, resurrected repeatedly since 2012, would have denied the refundable CTC to parents who file tax returns using an ITIN (Individual Taxpayer Identifications Number) — the alternative to a Social Security number that undocumented immigrants, among others must used to comply with their legal obligations.

That would have ended the annual income supplement that helps with the costs of raising more than 5 million children — as many as 4.5 million of them citizens, if that matters, as I think it shouldn’t.

At least two other proposals sought to prevent undocumented immigrants from claiming either one or both of the refundable tax credits. Whether these were only floated or actually put on the table only a fly on the wall could say.

Opponents fended them off. But Republican negotiators apparently felt the need to do something hostile to immigrants — if only to get enough of their colleagues on board when the bill came to a vote.

And their Democratic counterparts apparently felt they had to swallow something to get a deal done — and passed. They knew, after all, as did the Republicans, that right-wingers were insisting on a battery of anti-immigrants riders on the budget bill.

For whatever reasons, the final tax package does several things that will disadvantage some immigrant taxpayers.

One provision will deny those who filed with an ITIN but shortly thereafter got a Social Security number from claiming the EITC benefits they could have claimed before if they’d had it. Another will bar retroactive CTC claims in cases where the credit wasn’t initially claimed due to lack of an ITIN.

Still another will translate into law some recent rules that require about 21 million ITIN filers to get a new number and, at the same time, make the process more difficult.

Bottom Line

Even without the anti-immigrant provisions, the bill would be only far better than one that omitted the refundable tax credit improvements.

Progressive advocates and some members of Congress, not only progressives, have proposed further improvements. These will have to wait for another day — and a very different Congress.

Last but not least, the tax cuts alone will cost nearly $629 billion over the next 10 years, according to Joint Committee on Taxation estimates.* And not a penny of the revenue loss is offset. This will surely cramp needed investments.

To say that extensions of nominally temporary tax cuts are never paid for doesn’t make the bill fiscally responsible. This is one reason a majority of House Democrats and six in the Senate voted against it.

But, as CLASP says, “it is highly likely that Congress would have simply extended the business credits without doing anything for working families.”

So to my mind — and not mine only — the bill the President signed represents a major victory for the bipartisan-minded negotiators and for progressive advocates, including grassroots folks who signed petitions, called Congress members and visited them on Capitol Hill — or got in their faces when they were back home.

Something to recall as we head into a new year, with new challenges.

* The total package Congress passed postpones three taxes established by the Affordable Care Act. This makes the cost larger, though by how much we can’t yet know because the delays may or may not become conventional extenders



New Plan to Reduce Child Poverty in America

August 20, 2015

Children have the highest poverty rate of any age group in our country. Nearly 14.7 million of them — 19.9% — are officially poor, according to the latest Census report.

The percent is even higher for infants and toddlers, a new brief from the Center for American Progress tells us — nearly 23% or well over one in five. CAP has a four-part proposal to reduce the child poverty rate — and the depth of poverty for children who’d still be poor.

Unlike a plan I earlier blogged on, its parts all have to do with the Child Tax Credit. The first part, tucked into the brief as a starting point, is a permanent extension of the improvement the Recovery Act made. It’s now among the refundable tax credit improvements due to expire in 2017.

CAP’s plan would then do what some progressives advocated for the Recovery Act — drop the threshold for claiming the CTC to the first dollar of earned income, rather than the first dollar over $3,000.

At the same time, the plan would make the CTC fully refundable. In other words, a family would get a refund from the Internal Revenue Service for the entire amount its income tax liability fell short of the deductions and credits it claimed.

The credit now phases in to a maximum of $1,000 per child, leaving low-income parents with only a partial credit — or in some cases, no credit at all for a second or third child.

A third change would index the per child credit to inflation so that it didn’t lose value over time. Like the other two parts I’ve cited, linking the credit to the Consumer Price Index the IRS uses for tax provisions would make the CTC more like the Earned Income Tax Credit.

Now comes a part that CAP refers to as “enhancing” the CTC, but would actually be more like the child allowances many European countries (and a few others) provide. Families with children less than three years old would get $125 a month, regardless of income or how they net out at tax time.

They’d get this supplement monthly as a direct deposit to their bank account or on a debit card. So they’d have more to spend as they needed it to pay for the costs of caring for their babies and toddlers.

These costs can be very high. I’ve already said my bit about diapers. Full-time day care in a center for an infant cost, on average, more than $10,000 a year in half the states in 2013. And far from all poor and near-poor families can have their children’s daycare costs subsidized by either of the two main federal funding sources.

Rolling all the costs together, a CNN Money calculator tells us that a low-income family will have to pay, on average, an estimated $176,550 to raise a child born two years ago — $35,880 more if they live in an urban area in the northeast part of the country.

Now, CAP’s proposals would hardly supply parents with the wherewithal to pay for anything approaching this. Nor are they intended to. They wouldn’t eliminate child poverty either. They would, however, reduce it.

The overall poverty rate for children under seventeen would fall by 13.2%, CAP says. About 18% of children under three would be lifted out of poverty altogether — this, I assume, because of the extra income boost parents of children this young would get.

CAP also looks at the combined effects of its proposals on families with infants and toddlers who’d still have incomes (less any EITC refund and/or cash benefits) below the federal poverty line.

For them, it estimates how far its proposal would go toward closing the “poverty gap,” i.e., the difference between their average income and the FPL.

The gap would shrink by an estimated 26.1% nationwide, it reports. But, of course, the proposals would shrink the gap for all now-poor families with children — perhaps, in fact, lifting some of them above the FPL and, for sure, reducing the poverty gap for all.

The gap-closing effects of the proposals would vary considerably from state to state, a map supplement to the brief shows. They range from 25.4% in Hawaii to 12% in Wyoming. We who live in the District of Columbia could see a gap roughly 16.4% smaller.

CAP’s proposals would cost an estimated $29.2 billion if they were all in place this year. Somewhat more in the future, since the child tax credit would increase to keep pace with consumer price inflation.

This is hardly a big investment, even for spending through the tax code. So-called tax expenditures will cost the federal government about $1.22 trillion this year, the National Priorities Project reports.

Unlike many of the tax breaks, however, investments to reduce child poverty would pay for themselves many times over. An oft-cited study conducted in 2007 concluded that child poverty cost our country about half a trillion a year. Adjusting for inflation, CAP puts the total at more than $672 billion.

But this is a low-end estimate because the study included only the largest and mostly easily quantifiable costs, as the authors dutifully noted.

One doesn’t, I think, want our policies to hinge on dollars saved by alleviating the hardships and lifelong consequences of growing up in a family that’s so short on money as to be officially poor — or the hardships parents suffer to do the best they can for their children.

But if the return on investment would help CAP’s proposals gain support in a Congress that seems reluctant to even sustain the anti-poverty programs we’ve got, a strong talking point is ready to hand.


Why Worry Now About Time-Limited Refundable Tax Credit Expansions?

March 12, 2015

Say Congress decided to preserve the expansions of the Earned Income Tax Credit and Child Tax Credit that were originally part of the Recovery Act. What would this mean for low and moderate-income working families? Citizens for Tax Justice answers.

In 2018, more than 13 million families, including about 24.8 million children would benefit by an average of $1,073 per family. They’d gain an average of $905 per child. This is only the first year the tax credits will revert to their earlier forms unless Congress acts.

CTJ provides state-by-state estimates, as well as these national estimates — and for each of the refundable tax credits, as well as the two together.

So we learn, for example, that 20,175 families in the District of Columbia, including nearly 45,000 children would benefit from the two tax credits combined. Their average gain would be slightly more than the national average — $1,093 per family. This is somewhat more than two whole weeks of pay for a full-time worker earning what will then be the minimum wage.

The expanded CTC would have the greater impact in terms of both the number of families helped and the average per child benefit, according to the estimates. This is presumably because, without the expansion, families who owe less than zero in income taxes couldn’t receive any refund at all unless their incomes were somewhere around $14,700.

But, as I noted in an earlier post, the District’s own EITC is linked to the federal, as is also the case for all but one of the 25 states with their own EITCs. So the ultimate boost to family budgets is greater than what CTJ estimates.

The flip side of all this, of course, is that a large number of family budgets would take a hit if Congress lets the refundable tax credit improvements die. And that seems thus far what Republicans have in mind.

They do rather like the notion of a child tax credit. But they would expand it up the income scale, while letting the threshold for claiming it revert to its pre-Recovery Act minimum, plus all the inflation adjustments since 2009 — and further adjustments yearly.

The bill the House passed last year, with some Democratic support, would have reduced after-tax income not only for families that couldn’t claim the refundable CTC at all, but for those with incomes as high as $40,000 a year.

President Obama’s budget would make the Recovery Act improvements permanent. The first-year cost in lost revenues would be slightly under $14 billion, CTJ says. A small fraction of the budget, but not chump change.

And, of course, the 10-year estimate we’re used to seeing is considerably higher — roughly $103.8 billion, if I’m reading the Treasury Department’s table correctly. But the President’s budget includes revenue-raisers too.

Well, the President has proposed locking in the EITC and CTC improvements before. Best he could get was an extension that will expire at the end of 2017. Many of us haven’t even filed our 2015 tax returns yet. Why should we worry about 2018 now?

The answer lies in what’s underway in our Republican-controlled Congress. On the House side, Republicans are again moving to convert time-limited tax breaks, mostly for businesses, into permanent law.

The packages they’ve already passed will cost more than $93 billion over the first 10 years. No offsets for the revenue losses, just as there weren’t last year. And there are other temp-to-perm tax breaks in the pipeline.

The more such “tax reform” we have, the slimmer the chances of saving the refundable tax credit improvements. Just look at that deficit, Republicans will say when the improvements are about to expire. Can’t possibly extend them. Next thing you know, we’d be Greece.

We need also to consider the practical politics of trying to pass a bill that does nothing by extend expanded tax breaks for lower-income families. Things being as they are, these benefits don’t stand much of a chance unless they’re packaged with others that appeal to Congress members who’ve got their eyes on wealthier constituents and/or corporate donors.

This, I think, is what top experts at the Center on Budget and Policy Priorities meant when they said, about last November’s huge tax break package, that it risked “stranding” the temporary EITC and CTC provisions that have proved so beneficial to low-income working families.

The fewer tax breaks Congress has left to extend, the fewer the “linkages” supporters can make — or perhaps one should say the fewer opportunities for horse-trading.

In another world, we wouldn’t need them. The EITC and CTC, in their current forms, have lifted more people out of poverty than any other federal benefit, except Social Security — 8.8 million last year, the Census Bureau reports.

The tax credits reward work. We’re supposed to like that. They help support families with children. We’re supposed to like that. And I believe we do, Republicans and Democrats alike, though we’ve differences between and within the parties on certain types of families.

Be that as it may, the EITC and CTC expansions are clearly endangered. We’d otherwise find them in bills that aim to make other time-limited tax measures permanent. And we certainly wouldn’t have had Republicans blaming their exclusion on the President’s immigration actions.

Nothing Friendly to Low-Income Families in House Republicans’ Child Tax Credit Reform

July 2, 2014

Republicans on the House Ways and Means Committee took another step in their piecemeal approach to tax reform last week. The focus this time was the individual tax code — specifically, the Child Tax Credit.

No big surprise here, I suppose. We know Republicans have decided they need to show they care about the interests of working families. And what could be more family friendly than a more generous Child Tax Credit?

For better-off families, the Ways and Means bill surely is that. But for low-income families, nothing of the sort. Some millions, in fact, could no longer claim it at all.

What Is the Child Tax Credit?

Like the Earned Income Tax Credit, the Child Tax Credit reduces federal tax liabilities for filers who claim it. In the case of the CTC, those eligible are parents with dependent children under the age of 17. Each of the kids is worth a credit of up to $1,000.

Also like the EITC, the CTC phases in and then out. However, anyone with earned income can claim the EITC. For the CTC, the phase-in currently begins at $3,000.

This threshold isn’t permanent law. It was set by the Recovery Act and extended through 2017 as part of the fiscal cliff deal. Without the extension, the threshold would have been about $13,300 last year — and higher this year because the permanent law provides for an annual adjustment to reflect inflation.

The income level at which the phase-out begins depends on whether the filer is a single parent or married — and if married, whether filing jointly or separately.

The phase-out threshold for a single parent is more than twice the threshold for a married couple filing jointly — $75,000, as compared to $110,000. The threshold for a married person filing separately is simply half the joint filer threshold.

The fact that the threshold for a married couple is less than double the threshold for two single parents is sometimes referred to as a marriage penalty. The penalty here, i.e., the ability to claim the full credit, kicks in only when a single working parent marries — and obviously not always then.

Unlike the EITC thresholds, the CTC phase-out thresholds aren’t indexed to keep pace with inflation. But they’re considerably higher. For example, a married couple becomes ineligible for the EITC when its income is less than half the phase-out threshold for the jointly-filing couple claiming the CTC.

What Does the Ways and Means Bill Do?

The bill House Ways and Means Republicans passed would eliminate the so-called marriage penalty by raising the phase-out threshold for married couples filing jointly to twice the threshold for single parents — $150,000.

The higher threshold would be indexed to inflation, as would the threshold for single parents. The maximum $1,000 per child credit would also increase with the inflation rate.

The maximum credit boosts would, of course, benefit only families with earnings high enough to qualify for the full credit. Many already don’t. In 2011, 23% of children with working parents received only a partial credit, according to a Tax Policy Center brief.

These changes would all become permanent law — at an estimated cost of nearly $115 billion over the first 10 years. Again, no offset, since tax breaks seem to have a privileged status.

But not altogether. The CTC improvements initiated by the Recovery Act would be left to expire. So the threshold set in permanent law would kick in at the end of 2017, with all the inflation adjustments since it was temporarily superseded. And that qualifying threshold will rise — and rise — because there will be ongoing annual adjustments.

How Would the Bill Affect Low-Income Families?

As of 2018, families earning less than about $14,500 wouldn’t qualify for the CTC at all, according to the Center on Budget and Policy Priorities’ analysis of the bill.

A single mother with two children and that $14,500 a year income would lose $1,750. Parents with somewhat higher incomes would lose as well, since their credits would, as now, be calculated on the basis of how much they made over the threshold.

At the same time, a married couple with two children and a joint income at the new phase-out threshold would gain $2,200. And families with considerably higher incomes would still qualify for a partial credit.

Looking forward to 2023, the Tax Policy Center projects that more than two-thirds of the credit, in dollars, would benefit families in the top two-fifths of the income scale.

The refundable Child Tax Credit lifted about 3 million people — more than half of them children — above the poverty threshold in 2012, according to another CBPP analysis.

Without the Recovery Act improvements, roughly 900,000 more people would have been officially poor. This, as I’ve often remarked, is very poor indeed.

One can understand then why no Democrats on the Ways and Means Committee voted in favor of the misnamed Child Tax Credit Improvement Act.

Improvements friendly to better-off families, for sure. But as in the past, Republicans don’t extend their friendliness to families at the bottom of the income scale — not even those who work.

UPDATE: The House Rules Committee added a provision to this bill that would deny the CTC to parents who file using an Individual Tax Identification Number, rather than a Social Security number. These are mostly immigrants. According to recent estimates, about 5.5 million children would lose the credit. All but about a million are U.S. citizens.


Who Should Pay for Extended Unemployment Benefits?

February 3, 2014

Politico reports progress in the Senate toward renewing Emergency Unemployment Compensation. The “biggest sticking point” may again be amendments, it notes.

As I said last week, the effort to renew EUC broke down because Republicans wanted to offer amendments to the short-term, stopgap bill that was one of the options Majority Leader Harry Reid proposed.

Some of those amendments would have offset the costs in ways that many, if not all Democrats would have found too objectionable to vote for, even though defeating them could have led Republicans to again block a vote on the bill itself — and blame them for the harm.

Here, as promised, are how two of them would pay for the short-term extension. Each answers the question in the title above differently, but both deny safety net benefits to vulnerable low-income people.

Low-Income Children Should Pay for It

Senator 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 refundable part of the Child Tax Credit to immigrants who don’t have Social Security numbers — even if their children are U.S. citizens, as an estimated four million are.

Well over two million families would have to pay, on average, $1,800 more in taxes a year, according to figures in a 2011 report by the Treasury Department’s Inspector General. That’s a big bite, since they reportedly earn, on average, $21,000 a year.

The money saved by denying the credit to immigrants who dutifully pay their taxes would far exceed the costs of the three-month extension Senator Ayotte wanted to attach it to.

Her amendment would commit nearly as much to restoring the full cost-of-living adjustment to pension benefits for some former members of the military services. The COLA took a nick in December’s budget deal.

As you might imagine, there have been howls from diverse quarters. So Ayotte cleverly aims to put Democrats in a bind, since a vote to protect low-income children, most of them Hispanic, would be a vote against our veterans.

Now she’s amended her amendment to single out only immigrants whose children aren’t citizens — and styled it solely as a way of righting a wrong “against our men and women in uniform.”

It’s nonetheless a punitive pay-for, affecting a million or so children who had no say in where they were born or where they live now.

Severely Disabled Workers Should Pay for It

Senator Reid found some of his pay-for in the President’s last budget, which proposed a dollar-for-dollar reduction in SSDI (Social Security Disability Insurance) benefits when recipients receive unemployment benefits.

Senator Rob Portman (R-OH) took this dubious cost-saving idea and made it far worse, as the Center on Budget and Policy Priorities explains.

Basically, his amendment would define eligibility for unemployment benefits as proof that the laid-off disabled worker was engaged in substantial gainful activity — and ineligible for SSDI.

This would wholly redefine SGA, which under current rules, means earning more than $1,070 for nine months within a five-year period. Part-time work that pays less — or any work that’s been engaged in for less time — has no immediate effect on SSDI eligibility.

It does enable some recipients to supplement their far from generous monthly benefits — on average, $1,146 last month. And it gives them an opportunity to see if they can return to self-supporting work.

You’d think that a member of a party that believes in giving people a hand up out of the safety net would avoid anything that discouraged work.

But Portman’s amendment surely would because SSDI recipients who ventured back into the workforce could be dropped from the program if they were laid off, even if they didn’t claim the unemployment benefits they were entitled to.

They’d have to wait five months to reapply, just as newly-disabled workers do. And once they’d managed to get reapproved, they’d have to wait two years to qualify for Medicare, even if they’d been enrolled before.

I think it’s only fair to note that the Obama administration opened the door to this pay-for and that the Senate Democratic leadership kept it open. It’s an awful idea in principle, as Los Angeles Times columnist Michael Hiltzig says.

But it’s also true that Portman hasn’t, as he claims, taken a proposal from the President’s own budget — or that unemployment insurance and SSDI are “mutually exclusive.”

“We should never be forced to meet the needs of one vulnerable population by robbing another,” as Senator Tom Harkin (D-IA) told his colleagues a few weeks ago.

Both the SSDI and the Child Tax Credit pay-fors would do this. And they’d make permanent changes in the laws. A lot of harm to offset costs that would represent less than 0.014% of the federal budget.*

* This is the 10-year figure produced by the Center for Economic and Policy Research’s responsible budget calculator.