[Congressional Record Volume 146, Number 12 (Thursday, February 10, 2000)]
[Senate]
[Page S616]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JEFFORDS:
  S. 2053. A bill to amend the Internal Revenue Code of 1986 to provide 
marriage tax penalty relief for earned income credit; to the Committee 
on Finance.


                      MARRIAGE TAX PENALTY RELIEF

  Mr. JEFFORDS. Mr. President, today I am introducing a bill to reduce 
the marriage penalty built into the Earned Income Tax Credit--the EITC. 
It appears that Congress may well act to address the marriage penalty 
this year. Eliminating the marriage penalty is a worthwhile goal. A 
marriage license shouldn't come with a higher tax bill from Uncle Sam. 
As we consider this issue, however, I want to make sure that low-income 
taxpayers are not left out of the debate. In terms of dollars, the EITC 
marriage penalty may be relatively small, but for workers trying to 
raise children on low wages it represents a significant loss of income, 
and it may well deter couples from marrying.
  Though our nation's economy continues to thrive, many Americans still 
struggle to make ends meet. Working families across the nation hover 
above the poverty level, striving to stay off welfare and yearning to 
provide a decent life for their children. We can and must do more to 
help these families. And we can do it through the tax code in a manner 
that is proven and fair, using the earned income tax credit. The EITC 
is a refundable tax credit specifically targeted to help low-income 
workers and their families. In my state of Vermont, with soaring 
housing costs and spiking fuel costs, the EITC has proven effective in 
supplementing the income of working families.
  By some estimates, the EITC has moved more than two million children 
out of poverty. One recent report calls it the most effective safety 
net program for children in working poor families. In 1999, the EITC 
provided low-income working families with two children a subsidy of 
roughly 40 cents for every dollar of income. But after income reaches a 
certain point, the EITC is gradually phased out.
  Unfortunately, a marriage penalty is built into the EITC. This 
marriage penalty exists because a married couple's combined earnings 
put them at a higher point in the EITC phase-out range than where one 
or both of them would have been if they had remained single. If, for 
example, one minimum wage earner marries another minimum wage earner 
with two children, the couple's EITC would be over $1,300 less than the 
combined EITC they would have received if they hadn't gotten married. 
For working families that subsist on the minimum wage, this is a 
significant loss--more than half of their combined wages for a month.
  To reduce the EITC marriage penalty, the bill I'm introducing will 
extend the point at which the EITC begins to phase out. This is the 
approach I advocated, and which was subsequently adopted in last year's 
tax bill. It is also the approach adopted in the bill passed by the 
Ways and Means Committee. The difference between my bill and these 
other bills is the amount by which the beginning point of the phase-out 
range would be extended. The other bills proposed to extend it by 
$2,000. I propose to extend it by $3,500; this would provide 
significantly more marriage penalty relief. My back-of-the-envelope 
calculations indicate that my bill would eliminate about half of the 
marriage penalties built into the EITC.
  I do not have a cost estimate for this bill. For the Ways and Means 
marriage penalty bill, the Joint Committee on Taxation estimated that a 
$2,000 extension of the beginning point of the EITC phase-out would 
cost $11 billion over 10 years. This is a relatively small part of a 
bill whose overall 10-year cost is $182 billion.
  Last year, the conferees on the tax bill initially chose not to 
include help for EITC taxpayers in the marriage penalty provisions. I 
threatened to vote against the bill, probably depriving it of a 
majority in the Senate. The conference was reopened, and relief of the 
EITC marriage penalty was included in the final bill. I think that 
shows how strongly I feel about this issue. I'm glad that the House has 
looked out for low-income taxpayers in its marriage penalty bill. 
Still, I think we can do better.
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