[Congressional Record Volume 144, Number 67 (Friday, May 22, 1998)]
[Extensions of Remarks]
[Pages E970-E971]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     INTRODUCTION OF LEGISLATION TO REPEAL THE FAMILY INFLATION TAX

                                 ______
                                 

                        HON. BARBARA B. KENNELLY

                             of connecticut

                    in the house of representatives

                          Friday, May 22, 1998

  Mrs. KENNELLY of Connecticut. Mr. Speaker, I will introduce 
legislation today to repeal the family inflation tax. The $500 per 
child credit enacted in last year's Taxpayer Relief Act will provide 
vital tax relief to millions of American families. Its execution, 
however, has been flawed from the beginning.
  We were able to defeat the initial proposals to require families with 
incomes of less than $50,000 to reduce their $500 per child credits by 
50 percent of their day care credit, to cap the dependent care credit, 
and to deny the credit to families who receive the Earned Income Tax 
Credit. We tried but were unable to allow the credit against the 
individual Alternative Minimum Tax. As a result millions of families 
will be thrown into the individual Alternative Minimum Tax simply for 
claiming the child credit. I subsequently introduced H.R. 2524 to 
remedy this. However, this flaw beats them all.
  Did you know that some families, after receiving the initial benefit, 
will actually have their taxes increase in the future because of 
complicated efforts to reduce the benefits of the $500 child credit. 
Yes, that is correct. Over time, a number of families will see future 
tax increases even if their income does not change!
  This happens because of the interaction of three provisions, the 
partially refundable family credit, the reduction of the partially 
refundable family credit by minimum tax liability, and the inflation 
adjustments to the regular tax. For some families paying the minimum 
tax, the inflation adjustments cause tax increases by increasing 
minimum tax liability and thereby reducing partially refundable 
credits.
  So each year, the inflation adjustment of the standard deduction and 
personal exemptions--a provision that results in tax savings for the 
majority of taxpayers, actually results in a tax increase for these 
families. We must not allow this to happen. That is why today I am 
introducing legislation to correct this.
  On a related note, there is a tremendous amount of bipartisan support 
for fixing the marriage penalty. One of the most popular proposals 
would increase the standard deduction for married couples, a proposal 
that would actually make this problem worse. I have been talking about 
the need to fix the marriage penalty for years. We should fix it but we 
should also include this fix so we don't increase taxes on families in 
the name of eliminating a penalty.
  Please join me in repealing the Family Inflation Tax.

[[Page E971]]



                          ____________________