[Congressional Record Volume 149, Number 80 (Tuesday, June 3, 2003)]
[Senate]
[Pages S7250-S7251]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself, Mr. Frist, Mr. Graham of South 
        Carolina, Mr. Alexander, and Mrs. Hutchison):
  S. 1173. A bill to amend the Internal Revenue Code of 1986 to 
accelerate the increase in the refundability of the child tax credit, 
and for other purposes; to the Committee on Finance.
  Mr. GRASSLEY. Mr. President, I want to speak briefly about low-income 
families and the recently passed tax bill. There has been much heat and 
very little light about what we have done in this bill. Most of the 
heat has been focused on the conference decision not to retain the 
Senate position regarding acceleration from 10 percent to 15 percent as 
part of the refundable child credit--a change already scheduled to take 
place in 2005.
  Before I discuss this matter in detail, let me start by saying that I 
agree with my colleagues that we should seek to reconsider this 
provision. I am introducing legislation today that will do that, and 
will also, of equal, and perhaps greater importance, provide a uniform 
definition of a child and make the $1,000 child credit permanent. 
Finally, my bill will eliminate the marriage penalty that is contained 
in the child credit. This bill is an encompassing effort to help low-
income and middle-income families.
  The uniform definition of a child will help hundreds of thousands of 
families receive tax benefits for which they are not currently 
eligible. As important, it will bring simplification and clarity for 
millions of families, ensuring that they are not subject to IRS audit 
and collection efforts.
  The bill also makes permanent the $1,000 child credit. Otherwise, in 
2005 working families with two eligible children will receive a $600 
tax increase as the tax credit drops to $700. In addition, the bill 
accelerates the refundable calculation from 10 percent to 15 percent.
  Finally, the bill addresses the marriage penalty contained in the 
child credit. Currently, the child credit phases out at $75,000 for a 
single mother and a $110,000 for a married couple. My bill would 
eliminate the marriage penalty by having the credit phase out at 
$150,000. In addition, it adjusts the phase-out level for inflation.
  I do not need to wait for comments from my colleagues or from the 
media to take this action. Many from the media who attended my press 
conference the day of final passage of the conference report will 
recall that I stated then that I would quickly seek to revisit the 
child tax credit issues and seek Senate action on permanency of the 
child credit.
  Let me turn now to the acceleration issue. The media and some members 
of Congress seem to have a willful blindness as they discuss this 
matter. What are they blind to? The Earned Income Credit, EIC, program 
provides great assistance to the very population that is of concern.
  Let me give you an example: A family of four making $11,000 will be 
eligible for $50 under the refundable child credit. By accelerating it, 
as proposed by my bill and by others, they will now be eligible for 
$75. What does this family get under EIC? In 2002 they will get a check 
for $4,140. That means that family is paying no income tax and payroll 
tax of $842 and is getting a payment from the federal government of 
almost $3,300 in excess of the payroll tax they pay.
  You would never know this from the media accounts and the press 
releases. And even if there is a mention of the EIC, I have seen no 
mention of the dollar amount--the $4,00-plus check for families with 
two children and $2,500 for families with one child. Why is that? 
Because the chicken littles are too busy running around. I would hope 
that the concept of ``context'' would not be something of which the 
media has to be reminded. You would think from reading speeches and 
media accounts that the whole tax relief provided in the tax code to 
a family making $11,000 is the refundable child credit. The child 
credit for these families at this income level is a thimble compared to 
the enormous benefits of EIC.

  Let me remind my colleagues of the purpose of the child credit: It 
was designed to address the perceived penalty for working families as 
the EIC began to phase out. In fact, the original proposal of the 
refundable child credit that I drafted with Senator Baucus in 2001 
would not have begun to take effect until the point where the EIC 
begins to phase-out--at approximately $13,500 for a head of household 
and $14,500 for married couples.
  The Finance Committee heard testimony, and it was the repeated view 
of academics, that Congress needed to address the phase-out of the EIC. 
There was no testimony to the Senate Finance Committee and I can find 
very little in respectable academic discussions that advocated an 
increase in the check for EIC recipients--that the EIC top amount of 
$4,000 plus for two children or $2,500 for one child was insufficiently 
generous.
  So that is what was the genesis of the Finance Committee's support 
for a child credit--addressing somewhat the EIC phase-out as families 
begin to make more money. However, the beginning point of the phase-in 
was shifted at the request of some Senators to $10,000. That does not 
negate that the underlying purpose was and is to deal with the EIC 
phase-out.
  This concern about the phase-out is reflected in the actions we took 
in conference. By raising the child credit to $1,000 we helped put more 
money in the pocket of a single mom with one child making $17,000 to 
$20,000.
  That single mom making $20,000 will now get a $1,000 check instead of 
a $600 check under previous law.
  What if we were to only do as some propose and do acceleration to 15 
percent but not increase the child credit in 2005 to $1,000?
  Yes, it will mean a bit more for those families already receiving a 
$4,000-plus check under EIC--and I recognize that every penny counts to 
these families. But this proposal will also mean a tax increase on that 
single mom making $18,000, that single dad making $19,000 and that 
married couple with one child making $20,000. Why? Because they benefit 
more from the increase in the child credit to $1,000. The acceleration 
will not benefit them; they will quickly meet the maximum child credit. 
It is the increase to $1,000 that is the real

[[Page S7251]]

benefit for these families that do not receive the maximum benefits 
under EIC.
  That is why I urge my colleagues to support my legislation that helps 
millions of working families, and doesn't impose a tax on families that 
are working hard and getting themselves a little bit better paying job.
  And let me close with one other note. My colleagues should remember 
that it still takes 3 million taxpayers off the rolls completely. They 
will no longer have to pay tax under this legislation. Much of that is 
due to the increase in the child credit to $1,000.
  Finally, for those who want to talk about income tax relief for low-
income individuals, I would encourage them to remember this is many 
ways a bill that is in concert with the 2001 tax relief that created 
the 10 percent bracket and provided great income tax relief to singles. 
Again, a bigger picture that provides greater context of our work will 
show that we are providing broad-based relief to millions of taxpayers.
  I urge my colleagues to work with me in passing this full relief for 
families. I also think it is important that we pass legislation that 
can be passed into law by working with the House and the White House. 
We have already passed legislation that deals with just the 10 percent 
to 15 percent--the Finance Committee passed it and the Senate passed 
it. The Senate is on record on this matter already. Now is the time to 
bring real relief and permanent relief to all working families.
                                 ______