[Congressional Record Volume 151, Number 128 (Wednesday, October 5, 2005)]
[Senate]
[Pages S11141-S11142]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY (for himself and Mr. Schumer):
  S. 1824. A bill to amend the Internal Revenue Code of 1986 to 
strengthen the earned income tax credit; to the Committee on Finance.
  Mr. KERRY. Mr. President, today I am introducing the Strengthen the 
Earned Income Tax Credit Act of 2005. Since 1975, the EITC has been an 
innovative tax credit which helps low-income working families. 
President Reagan referred to the EITC as ``the best antipoverty, the 
best pro-family, the best job creation measure to come out of 
Congress.'' According to the Center on Budget and Policy Priorities, 
the EITC lifts more children out of poverty than any other government 
program.
  It is time for us to reexamine the EITC and determine where we can 
strengthen it. Census data released in August and the events of 
Hurricane Katrina reiterated the fact that there is a group of 
Americans that are not benefiting from the economic recovery. The 
Census data shows the number of people who work, but live in poverty 
increased by 563,000. Four million more people were poor in 2004 than 
in 2001, when the economy hit bottom. The poverty rate in 2004 remains 
higher than the rate in 2001, the year of the recession.
  Hurricane Katrina affected many individuals who were already faced 
with difficult economic situations. Mississippi, Louisiana, and Alabama 
are the first, second, and eighth poorest States in the Nation. The 
income of the typical household in these three States is well below the 
national average. In the hardest hit counties, 18.6 percent of the 
population is poor and the national average is 12.4 percent.
  Time after time, the Republican controlled Congress has passed tax 
cuts which are skewed towards those with the most. The Urban Institute-
Brookings Institution Tax Policy Center reports that households with 
incomes of more than $1 million a year--the richest two-tenths of the 
population--receive tax cuts of an average of $103,000 a year. These 
individuals do not have to worry about how they will have to pay for a 
roof over their heads or enough gas to fill the tank. We should not be 
focused on tax cuts which help those who do not have to worry about 
living pay check to pay check.
  We need to help the low-income workers who struggle day after day 
trying to make ends meet. They have been left behind in the economic 
policies of the last 4 years. We need to begin a discussion on how to 
help those that have been left behind. The Earned Income Tax Credit is 
the perfect place to start.
  The Strengthen the Earned Income Tax Credit Act of 2005 strengthens 
the EITC by making the following four changes: Reduce marriage penalty; 
increase the credit for families with

[[Page S11142]]

three or more children; slow down the phase-out for individuals with no 
children; and permanently extend the provision which allows members of 
the armed forces to include combat pay as income for EITC computations. 
By making these changes, more individuals and families would benefit 
from the EITC.
  First, the legislation increases marriage penalty relief and makes it 
permanent. In the way that the EITC is currently structured, many 
single individuals that marry find themselves faced with a reduction in 
their EITC once they are married. The tax code should not penalize 
individuals who marry.
  Second, the legislation increases the credit for families with three 
or more children. This proposal would make the credit more generous for 
families with 3 or more children. Increasing the credit rate results in 
an increase in the phase-out range. More families would be able to 
benefit from the EITC. The poverty level for an adult living with three 
children is $19,233. Under current law, an adult living with three 
children and eligible for the maximum EITC with income equivalent to 
the phase-out income level would still have income below the poverty 
level. This provision would lift this family above the poverty level. 
Some 36 percent of all children live in families with at least three 
children and more than half of poor children live in such families.
  Third, the legislation would slow down the phase-out rate for 
individuals without children. It would result in more individuals 
without children eligible for the credit. For 2005, an individual with 
earnings above $11,750 would not be eligible for the EITC. Under the 
proposal, an individual with earnings above $16,950 would not be 
eligible for the EITC. The EITC for individuals with no children only 
offsets a portion of federal taxes. Giving more individuals the EITC 
would help provide an incentive to work.
  Fourth, the Working Families Tax Relief Act of 2004 included a 
provision which would treat combat pay as earned income for purposes of 
computing the child credit. This provision expires at the end of the 
year. This legislation makes this provision permanent. There is no 
reason why a member of the armed services should lose their EITC when 
they are mobilized and serving their country.
  This legislation will help those who most need our help. It will put 
more money in their pay check. We need to invest in our families and 
help individuals who want to make a living by working. We are all aware 
of our fiscal situation and we should legislate in a responsible 
manner. It is a time for shared sacrifice. We do not need to extend tax 
cuts or allow tax cuts to go forward that only benefit those earning 
over $200,000. We cannot keep adding to the deficit
  Thank you for your consideration.

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