[Congressional Record Volume 153, Number 4 (Tuesday, January 9, 2007)]
[Senate]
[Pages S289-S290]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself, Mrs. Lincoln, Mr. Obama, and Mr. 
        Rockefeller):
  S. 218. 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 child tax credit would be refundable--up to 10 percent of 
earnings above $10,000.
  In 2004, 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 $11,750 are eligible to receive the refundable portion of 
the child tax credit. Low-income families earning less than $11,750 are 
shut out of the child tax credit completely.
  For example, a single mother who earns the current 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 $11,750 she 
originally needed to earn is adjusted for inflation and will increase.
  Today, I am introducing legislation, the Working Family Child 
Assistance Act, with Senators Lincoln, Obama, and Rockefeller that will 
enable more hard-working, low-income families to receive the refundable 
child credit this year. My legislation returns the amount of income a 
family must earn to qualify for the child tax credit to $10,000. 
Moreover, my bill would ``de-index'' the $10,000 threshold for 
inflation, so families failing to get a raise each year would not lose 
benefits.

[[Page S290]]

  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 has estimated that this 
legislation will allow an additional 600,000 families to benefit from 
the refundable child tax credit. The Maine Department of Revenue 
estimates that 16,700 families in Maine alone would benefit from our 
proposal. Two thousand of these Maine families would otherwise be 
completely locked out of the refundable child tax credit under current 
law.
  For example, my legislation provides a $113 child credit to a mom who 
earns $10,750 per year. That's money she could use to buy groceries, 
school books, other family necessities, and even pay rent.
  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 my 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.
  Mrs. LINCOLN. Mr. President, I come before the Senate to once again 
raise an issue that is near and dear to my heart--an issue that is of 
great importance to working families across this country. In 2001 and 
again in 2003, Senator Snowe and I worked together to ensure that low-
income working families with children receive the benefit of the Child 
Tax Credit. I come here today to again ask my colleagues to help me 
ensure that low-income families aren't forgotten as we discuss tax 
relief in the 110th Congress.
  Unfortunately, although we have made great strides in ensuring that 
the credit is a useful tool for our working families, in its current 
form it isn't working for everyone. We can and should take an important 
additional step to improve it.
  As some of my colleagues may be aware, to be eligible for the 
refundable child tax credit, working families must meet an income 
threshold. If they don't earn enough, then they don't qualify for the 
credit. The problem is that some of our working parents are working 
full-time, every week of the year and yet they still don't earn enough 
to meet the income threshold to qualify for the credit, much less to 
receive a meaningful refund.
  In 2006, the New York Times highlighted a report which shows that 
almost one-third of our children live in families that do not qualify 
for the child tax credit because family earnings are too low. When you 
break the findings down by race, it's even more disheartening--about 
half of all African American children and half of all Latino children 
are left out of the full child tax credit because their family's 
earnings are just too low to qualify.
  It is wrong to provide this credit to some hardworking Americans, 
while leaving others behind. The single, working parent that is 
stocking shelves at your local grocery store is every bit as deserving 
as the teacher, accountant or insurance salesman that qualifies for the 
credit in its current form. We must address this inequity and we must 
ensure that our tax code works for all Americans, especially those 
working parents forced to get by on the minimum wage.
  In response, Senator Snowe and I have proposed a solution that will 
build on our previous efforts to make this credit work for those that 
need it the most. Today, we are reintroducing the Working Child Family 
Assistance Act, legislation which de-indexes the income threshold and 
sets it at a reasonable level so that all working parents, including 
those making the minimum wage, qualify for the credit. This is a 
simple, easy solution to a serious problem.
  I look forward to working with my colleagues and the Administration 
to correct this inequity and to ensure that those low-income, hard-
working families that need this credit the most do receive its 
benefits.
  Mr. OBAMA. Mr. President, I rise to speak about the Child Tax Credit 
and to support S. 218, a bill I've worked on with Senators Snowe and 
Lincoln. Working families should get the tax relief they deserve, and I 
am proud to cosponsor this bill to help realize this aspiration. The 
Child Credit is an important component of our Federal tax code, and S. 
218 is an important step in making the credit more valuable and more 
fair for those who need it most.
  Raising children is expensive and has become even more so in recent 
years. The Child Tax Credit allows middle class families to claim a 
credit of $1,000 per child against their Federal income tax. That's a 
big help in covering these rising costs.
  Importantly, the Child Credit also recognizes the particular 
vulnerability low-income families with children. Since the credit is 
refundable to the extent of 15 percent of a taxpayer's earned income in 
excess of $11,300, 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, 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. 
Given that an estimated four and a half million households with 
children experienced this decline last year alone, we must reverse this 
unintended--and unfair--effect.
  In many cases, 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, working families 
whose incomes are not keeping up with rising costs. Recent data 
indicates that the typical low-income household actually saw its 
earnings decline during the first few years ofthis decade. At the same 
time, the costs of housing, childcare, and driving to work have 
increased sharply.
  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 for even a 
partial credit get no benefit at all. These are families whose incomes 
are far below the Federal poverty level and whose children ironically 
have the greatest needs--even as 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 the new Congress, 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 payoff. America can do 
this.
  I urge my colleagues to join me in supporting this important bill as 
a first step in addressing the broader goal of equal opportunity for 
all Americans.
                                 ______