[Congressional Record Volume 151, Number 122 (Tuesday, September 27, 2005)]
[Senate]
[Pages S10516-S10517]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself, Mrs. Lincoln, Mr. Chafee, Mr. Obama, 
        and Mr. Rockefeller):
  S. 1775. A bill to amend the Internal Revenue Code of 1986 to modify 
the income threshold used to calculate the refundable portion of the 
child tax credit; to the Committee on Finance.
  Ms. SNOWE. Mr. President, today Congress is confronted with how to 
best provide tax relief to American families earning slightly more than 
the minimum wage. We can do that by expanding the availability of the 
child tax credit to more working families.
  In 2001, I pushed to make the child tax credit refundable for workers 
making around the minimum wage. As enacted in 2001, a portion of a 
taxpayer's

[[Page S10517]]

child tax credit would be refundable--up to 10 percent of earnings 
above $10,000.
  Last year, Congress passed the Working Families Tax Relief of 2004, 
which increased from 10 percent to 15 percent the portion of the child 
tax credit that is refundable. Although the legislation increased the 
amount of the refundable child credit, it failed to increase the number 
of families eligible for the benefit. The consequences are serious for 
low-income Americans living paycheck to paycheck. It means that tens of 
thousands of low-income families will be completely ineligible for a 
credit they should receive.
  This year, because the income threshold is indexed, only taxpayers 
earning over $11,000 are eligible to receive the refundable portion of 
the child tax credit. Low-income families earning less than $11,000 are 
shut out of the child tax credit completely.
  For example, a single mother who earns the minimum wage and works a 
40 hour week for all 52 weeks of the year fails to qualify for the 
refundable portion of the child tax credit. Since the mother earns 
$10,700, she is a mere $300 away from qualifying for the credit. Worse, 
if the single mother does not receive a raise the following year, it 
will be even tougher to qualify because the $11,000 she originally 
needed to earn is adjusted for inflation and will increase.
  I am introducing legislation, the Working Family Child Assistance 
Act, with Senators Lincoln, Chafee, Obama, and Rockefeller that will 
enable more hard-working, low-income families to receive the refundable 
child credit this year. My legislation returns to $10,000 the amount of 
income a family must earn to qualify for the credit. Moreover, my bill 
would ``deindex'' the $10,000 threshold for inflation, so families 
failing to get a raise each year would not lose benefits.
  Most notably, my bill is identical to the refundable child credit 
proposal the Senate passed in May 2001 as part of its version of that 
year's tax bill. Although I was able to ensure that a refundable child 
credit would be part of the final bill sent to President Bush, 
conferees did index the $10,000 threshold to inflation despite my best 
efforts.
  The staff of the Joint Committee on Taxation estimates that this 
legislation will allow an additional 600,000 families to benefit from 
the refundable child tax credit.
  For example, the legislation provides a $113 child credit to a mom 
who earns $10,750 per year. That's money she could use to buy 
groceries, rent, school books and other family necessities.
  The Commerce Department recently reported that between August 2004 
and August 2005 average weekly wages adjusted for inflation fell 1.1 
percent. Obviously, families need all the help we can give them.
  Our families and our country are better off when government lets 
people keep more of what they earn. Parents deserve their per-child tax 
credit, and this bill rewards families for work.
  I am committed to this issue and have called on President Bush to 
work with Congress so we can help an additional one million children, 
whose parents and guardians struggle every day to take care of them.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1775

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Working Family Child 
     Assistance Act''.

     SEC. 2. $10,000 INCOME THRESHOLD USED TO CALCULATE REFUNDABLE 
                   PORTION OF CHILD TAX CREDIT.

       (a) In General.--Section 24(d) of the Internal Revenue Code 
     of 1986 (relating to portion of credit refundable) is 
     amended--
       (1) by striking ``as exceeds'' and all that follows through 
     ``, or'' in paragraph (1)(B)(i) and inserting ``as exceeds 
     $10,000, or'', and
       (2) by striking paragraph (3).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.
       (c) Application of Sunset to This Section.--Each amendment 
     made by this section shall be subject to title IX of the 
     Economic Growth and Tax Relief Reconciliation Act of 2001 to 
     the same extent and in the same manner as the provision of 
     such Act to which such amendment relates.

  Mr. President, I rise to speak about the Child Tax Credit and to 
support S. 1775, a bill I've worked on with Senators Snowe and Lincoln. 
I am proud to cosponsor this bill to help working families get all the 
tax relief they deserve. The Child Credit is an important component of 
our federal tax code, and S. 1775 is an important step in making the 
credit more valuable and more fair for those who need it most.
  The Child Credit recognizes that raising children is expensive and 
allows middle class families to claim a credit of $1,000 per child 
against their federal income tax. That's a big help.
  Importantly, the Child Credit also recognizes the particular 
vulnerability of low-income families with children. Since the credit is 
refundable to the extent of 15% of a taxpayer's earned income in excess 
of $10,750, families earning more than that threshold level of income 
get at least a partial benefit even if they have no federal income tax 
liability. The benefit may be small for families with low incomes, but 
every penny helps defray the rising costs of being a working parent in 
America today.
  Unfortunately, as currently structured, the Child Credit leaves more 
and more families out of the benefit each year. That's because the 
income threshold for eligibility rises annually at the rate of 
inflation even though family incomes may not rise as fast. That means 
that if you earn the minimum wage, which has not increased since 1997, 
or if your wage is low and you didn't get a raise, or if you worked 
fewer hours than the year before, then your tax refund probably shrunk. 
It may even have disappeared. That strikes me as unfair, and it's what 
almost four and a half million households with children will experience 
this year.
  Generally, indexing the parameters of the tax system for inflation 
makes sense because it neutralizes the effects of inflation on the tax 
system. In this case, however, indexing the threshold results in an 
unfair tax increase for low-income families whose incomes are stagnant 
or falling. Recent data indicates that the typical low-income household 
actually saw its earnings decline during the first few years of this 
decade. At the same time, the costs of housing, childcare, and driving 
to work have increased.
  This bill returns the threshold to its original level of $10,000 and 
freezes it, thereby expanding the benefit to include more kids and 
protecting those families from unfair tax increases due to inflation. 
This is an important step in improving the fairness of our tax code and 
providing necessary support to working families.
  In time, I hope we will do more. It is unfair that more than eight 
million children in families with incomes too low to qualify even for a 
partial credit--these are incomes far below the federal poverty level--
get no benefit at all. Ironically, these children have the greatest 
needs, and their parents pay an enormous share of their incomes in 
taxes and basic services, such as food, housing, and clothing.
  America can do better. In time, I hope we will tackle the broader 
challenge of ensuring that their parents have jobs that pay living 
wages, a home they can afford, a school district that enables a life of 
opportunity, a community that cares for its children, and the faith 
that hard work and personal commitment pay off. America can do this.
  I urge my colleagues to join me in supporting this important bill as 
a first step in partnering with me in addressing the broader goal of 
equal opportunity for all.
                                 ______