[Congressional Record Volume 157, Number 31 (Thursday, March 3, 2011)]
[Senate]
[Pages S1220-S1221]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY (for himself and Mr. Rockefeller):
  S. 467. 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 Senator Rockefeller and I are 
reintroducing the Strengthen the Earned Income Tax Credit Act of 2011. 
Since 1975, the earned income tax credit, 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 lifted 
6.5 million people, including 3.3 million children, above the poverty 
line in 2009.
  Last Congress, we were successful in making temporary improvements to 
the EITC by providing marriage penalty relief and increasing the credit 
rate for families with three or more children. Both of these provisions 
have been part of our legislation.
  It is time for us to reexamine the EITC and determine where we can 
strengthen it. The Finance Committee of which I am a member has started 
a series of hearings on tax reform. I believe the tax code should be 
thoroughly reviewed to see what is working and not working and what can 
be made simpler. This legislation expands the EITC permanently, but as 
part of tax reform I would be open to changing the program. However, 
those currently benefiting from the EITC should not be harmed in tax 
reform and there should still be tax relief which encourages work and 
helps low-income families with children.
  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 eight years. We need to begin a discussion on how 
to help those that have been left behind. The EITC is the perfect place 
to start.
  The Strengthen the Earned Income Tax Credit Act of 2011 strengthens 
the EITC by making the following changes: makes permanent marriage 
penalty relief; makes permanent the credit for families with three or 
more children; expands the credit for individuals with no children; 
simplifies the credit; and increases the penalty for tax preparers.
  The legislation would make the marriage penalty relief included in 
the American Recovery and Reinvestment Act permanent. Under the 
American Recovery and Reinvestment Act, the phase-out income level for 
married taxpayers that file a joint return would be $5,000 higher than 
the income level for unmarried filers starting in 2009 and in 2010. 
This level would be indexed for inflation after 2009. The Tax Relief, 
Unemployment Insurance Reauthorization and Job Creation Act of 2010 
extended this provision through 2012. Without this provision, many 
single individuals that marry find themselves faced with a reduction in 
their EITC. In Massachusetts, approximately 100,500 children a year 
benefit from the EITC because of this provision.
  Second, the legislation makes permanent the credit for families with 
three or more children. Under prior law, the credit amount is based on 
one child or two or more children. The American Recovery and 
Reinvestment Act created a third child category for 2009 and 2010 and 
Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act 
of 2010 extended this provision through 2012. This change benefits 
approximately 116,000 children a year in Massachusetts.
  Third, this legislation would increase the credit amount for 
childless workers. The EITC was designed to help childless workers 
offset their payroll tax liability. The credit phase-in was set to 
equal the employee share of the payroll tax, 7.65 percent. However, in 
reality, the employee bears the burden of both the employee and 
employer portion of the payroll tax. A typical single childless adult 
will begin to owe Federal income taxes in addition to payroll taxes 
when his or her income is only $10,655, which is below the poverty 
line. These changes will result in a full time worker receiving the 
minimum wage to be eligible for the maximum earned income credit 
amount.
  This legislation doubles the credit rate for individual taxpayer and 
married taxpayers without children. The credit rate and phase-out rate 
of 7.65 percent is doubled to 15.3 percent. For 2007, the maximum 
credit amount for an individual would increase from $457 to $929. In 
addition, the legislation would increase the credit phase-out income 
level from $7,590 to $12,690 for individuals and from $12,670 to 
$17,770 for married couples. This increase is indexed for inflation and 
includes the marriage penalty relief. Under current law, workers under 
age 25 are ineligible for the childless workers EITC. The Strengthen 
the Earned Income Tax Credit Act of 2011 would change the age

[[Page S1221]]

to 21. This age change will provide an incentive for labor for less-
educated younger adults.
  Fourth, the Strengthen the Earned Income Tax Credit Act of 2011 
simplifies the EITC by modifying the abandoned spouse rule, clarifying 
the qualifying child rules, and repealing the disqualified investment 
test.
  Finally, the legislation includes a provision which increases the 
penalty imposed on paid preparers who fail to comply with EITC due 
diligence requirements from $100 to $500. Unfortunately, about a 
quarter of EITC returns include errors and more than a majority of EITC 
returns are prepared by a preparer. This should help ensure that 
preparers comply with the due diligence requirements.
  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. I urge my 
colleagues to support an expansion of the EITC.
                                 ______