[Congressional Record (Bound Edition), Volume 147 (2001), Part 1]
[Extensions of Remarks]
[Page 1559]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 1559]]

    INTRODUCTION OF LEGISLATION TO CREATE THE ``WORKER'S INCOME TAX 
                                CREDIT''

                                 ______
                                 

                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                      Wednesday, February 7, 2001

  Mr. LaFALCE. Mr. Speaker, today I introduce legislation to provide 
substantial tax relief to all Americans through the Worker's Income Tax 
Credit. In brief, this bill will create a refundable tax credit equal 
to 6.2% of wages, up to a maximum of $350 per earner. For couples, the 
credit is computed per earner, for a maximum credit of $700 per couple.
  I believe any tax cut plan should pass two requirements: it should be 
fair, and it should be fiscally responsible. This proposal meets both 
standards. The Worker's Income Tax Credit provides a tax cut to all 
workers, but provides the most relief to those who need it most--middle 
and lower income workers. And it does so without undermining fiscal 
responsibility. This proposal will cost less than $440 billion over ten 
years, leaving enough surpluses to achieve the goals of debt reduction 
and meeting critical investment needs.
  ``The Worker's Income Tax Credit Is Fair and Simple''.--All workers, 
rich and poor, will benefit from this tax cut. But the relief will be 
greatest for those whose tax burden is most onerous--middle and lower 
income working families. The vast majority of the tax cut's benefits 
would accrue, not to the wealthiest 10% of tax payers, but to the 
remaining 90%. Compare this to President Bush's version of tax fairness 
and equity. When fully phased in, the $2.1 trillion Bush tax plan would 
deliver half of all its benefits to the wealthiest 5% of taxpayers. 
President Bush may hold up highly-stylized examples of waitresses and 
lawyers who will benefit from his tax cut, but in reality, it will tax 
a legion of tax lawyers to determine who qualifies and who doesn't for 
the Bush tax cuts. But the complexity of his plan can not obscure the 
basic fact of where most of the money goes--and it doesn't go to the 
waitresses of this country. For example, while the lawyer earning 
$200,000 in President Bush's example would receive a tax cut of 
approximately $3,100 a year, a waitress who is married with family 
earnings of $25,000 would receive absolutely no benefits from the Bush 
tax plan.
  Low-income workers will benefit from the Worker's Income Tax Credit 
because the credit is refundable. A full-time minimum wage earner would 
qualify for the full $350 credit, and a couple working at minimum wage 
would receive a $700 credit. But the benefits are not limited to low-
income workers. Anyone earning more than $5,600 a year would qualify 
for the full credit, and those earning less would receive a partial 
credit.
  ``The WITC is a better alternative to President Bush's Marginal Rate 
Cuts''.--Because a majority of Americans pay more in payroll taxes than 
they do in income taxes, adjustments to marginal income tax rates will 
not provide significant tax relief to most taxpayers, and particularly 
to lower and middle income workers. In focusing on marginal rate 
adjustments, particularly at the high end, President Bush makes our tax 
system more regressive, favoring wealthier taxpayers over middle and 
lower income workers. While the bottom 40 percent of the population 
would receive just 4% of the Bush tax cuts, the wealthiest 1% of 
taxpayers would receive 43% of the total tax cuts. The Worker's Income 
Tax Credit does just the opposite, favoring lower and middle income 
workers over the wealthy by extending a refundable credit to all 
workers, even when they face little or no income tax liability.
  ``The Worker's Income Tax Credit will alleviate the Marriage Tax 
Penalty''.--There is considerable support in this Congress for 
addressing the marriage tax penalty. I am strongly in favor of 
achieving a workable solution to addressing this problem in the tax 
code, but I would also offer the Worker's Income Tax Credit as a means 
of providing some relief from the penalty. In short, the tax credit is 
doubled for two-earner married couples. As a result, it will provide 
relief from the additional tax burden that two-earner couples face as a 
result of being married.
  ``The Worker's Income Tax Credit is fiscally responsible''.--The tax 
credit will cost approximately $440 billion over ten years, less than 
1/4 the estimated cost of the Bush tax plan, which has grown to exceed 
$2 trillion by recent estimates.
  Given current and projected budget surpluses, it is appropriate to 
provide taxpayers with significant tax relief. However, favorable 
surplus estimates do not give us license to pursue an irresponsible 
fiscal policy. We worked hard during the 1990's and made painful budget 
decisions to achieve the surpluses we now enjoy. It would be 
tremendously irresponsible to squander that effort before we achieve 
our debt reduction and federal investment goals.
  The total cost of the broad-based Worker's Income Tax Credit is 
modest enough that it could be combined with other reasonable tax cut 
priorities. I have suggested that a reasonable tax package would not 
exceed $700-$800 billion over ten years, allowing room for passage of a 
number of other tax cut priorities in addition to the Worker's Income 
Tax Credit.
  Mr. Speaker, if we can all agree on the principles of fairness and 
fiscal responsibility in considering any tax cut, then I hope we can 
also agree that the Worker's Income Tax Credit is an excellent means of 
providing tax relief to the American people this year.
  The text of the bill follows:

                                H.R. --

       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 ``Worker's Income Tax Credit 
     Act of 2001''.

     SEC. 2. REFUNDABLE CREDIT FOR INDIVIDUALS BASED ON EARNED 
                   INCOME.

       (a) General Rule.--Subpart C of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     refundable credits) is amended by redesignating section 35 as 
     section 36 and by inserting after section 34 the following 
     new section:

     ``SEC. 35. WORKER CREDIT.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this subtitle for the taxable year the amount equal to 6.2 
     percent of the sum of--
       ``(1) the individual's wages, salaries, tips, and other 
     employee compensation includible in gross income, plus
       ``(2) the individual's earned income (as defined in section 
     401(c)(2)).
       ``(b) Limitation.--The amount allowed as a credit under 
     subsection (a) to an individual for any taxable year shall 
     not exceed $350.''.
       (b) Conforming Amendments.--
       (1) Section 1324(b)(2) of title 31, United States Code, is 
     amended by inserting ``or from section 35 of such Code,'' 
     after ``1978,''.
       (2) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of the Internal Revenue Code of 
     1986 is amended by striking the last item and inserting the 
     following new items:

``Sec. 35. Worker credit.
``Sec. 36. Overpayments of tax.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     

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