[Congressional Record Volume 141, Number 58 (Wednesday, March 29, 1995)]
[Extensions of Remarks]
[Pages E719-E720]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                     FAMILY TAX CREDIT IS NOT FAIR

                                 ______


                            HON. SAM GIBBONS

                               of florida

                    in the house of representatives

                         Tuesday, March 28, 1995
  Mr. GIBBONS. Mr. Speaker, in recent days, we have seen a debate among 
the Republicans over the issue of whether they should breach their 
Contract With America by denying the family tax credit to the 3 percent 
of all taxpayers who have children and incomes over $95,000. It is 
interesting to note at this time that, without much concern and with no 
debate, they have already breached their Contract With America by 
denying the family tax credit to low- and moderate-income families with 
large Social Security tax payments but small income tax liabilities.
  All versions of the Contract With America before the introduction of 
H.R. 1215 provided a family tax credit with limited refundability for 
families with Social Security tax payments in excess of the earned 
income tax credit. In testimony before the Ways and Means Committee, 
the president of H&R Block commended the authors of the contract for 
including this limited refundability feature. He quite accurately 
pointed out that this feature enabled many low- and moderate-income 
working families to benefit from the family credit. In recent weeks 
Republicans have argued that this limited refundability was the result 
of inadvertent drafting errors. When one looks at the record, this 
explanation is difficult, if not impossible, to believe.
  On September 27, 1994, Mr. Armey issued a press release which 
included the statutory draft of the family credit. He stated that the 
Republicans put the bill in a contract ``so people can hold us 
accountable.'' On the first page of the bill included in that press 
release, the term ``refundable'' appears. On page 2 of the bill, it is 
quite clear that the credit was to be allowed against Social Security 
taxes. We now are willing to hold Mr. Armey and the rest of the 
Republicans accountable for their failure to retain this limited 
refundability feature in the bill reported by the Committee on Ways and 
Means.
  On January 6, 1995, the family tax credit was reintroduced as part of 
H.R. 6. Again, we see the term ``refundable'' on page 2 of the bill. 
This time more care was taken to ensure that the credit was actually 
refundable. There is more than a full page of detailed statutory 
language to guarantee that the credit is allowed against a taxpayer's 
Social Security tax liability. The bill also amends an obscure 
provision in title 31 of the United States Code which provides a 
permanent appropriation for refundable tax credits.
  Recently a Republican aide was quoted as blaming the refundability 
contained in prior versions of the contract on ``faceless, nameless, 
pointy bureaucrats.'' The fact is that H.R. 6 was drafted with the full 
participation of the Republican staff of the Ways and Means Committee 
and the staff of the Joint Tax Committee. The care and precision of the 
drafting contained that bill is an accurate reflection of the technical 
expertise of those staffs. To blame the refundability feature contained 
in
 that bill on an inadvertent drafting error is simply not believable.

  The decision reflected in H.R. 1215 to deny the limited refundability 
feature of the family credit that was part of the original Contract 
With America was required to offset the cost of the additional 
corporate tax benefits provided in the bill. Denying limited 
refundability reduced the cost of the family tax credit by 
approximately $13 billion over 5 years with over two-thirds of this 
revenue gain coming from working families with incomes less than 
$50,000. Denying the family tax credit to families with incomes over 
$95,000 raises approximately the same amount of money. The Republican 
leadership had a choice when developing H.R. 1215 and the choice they 
made was to reduce benefits to families earning less than $50,000 
rather than to reduce the benefits to families earning more than 
$95,000.
  The following examples show the effects of this contractual breach on 
hard-working, moderate-income families.
Examples of Families Who Would Get Smaller Family Tax Credit Under H.R. 
           1215 Than Under the Original Contract With America

       Relative to the original Contract With America, H.R. 1215 
     makes the $500-per-child family tax credit nonrefundable. 
     This means that many working families who would have received 
     credits under the original Contract will receive much smaller 
     credits under H.R. 1215. H.R. 1215 takes $13 billion out of 
     the pockets of America's working families. In fact, two-
     thirds of that cutback from the original Contract will come 
     from families with less than $50,000. (Examples are for 
     1996).
       Example 1--Young Couple With Their First Child: Family of 
     3, 1 Child $15,000 per year.
       Under the original Contract with America, this family would 
     receive a family credit of $500.
       Under H.R. 1215, this family would receive a family tax 
     credit of $90.
       Relative to the original Contract, this family will lose 
     $410.
       Example 2--Middle-Aged Divorced Mother Back In the Work 
     force: Family of 4, 3 Children, $20,000.
       Under the original Contract with America, this family would 
     receive a family credit of $1,500.
       Under H.R. 1215, this family would receive a family tax 
     credit of $585.
       Relative to the original Contract, this family will lose 
     $915.
       Example 3--Family With One High-School-Educated Worker: 
     Family of 5, 3 Children, $22,000 per year.
       [[Page E720]] Under the original Contract with America, 
     this family would receive a family credit of $1,500.
       Under H.R. 1215, this family would receive a family tax 
     credit of $375.
       Relative to the original Contract, this family will lose 
     $1,125.
     

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