[Congressional Record (Bound Edition), Volume 147 (2001), Part 10]
[Senate]
[Pages 14620-14622]
[From the U.S. Government Publishing Office, www.gpo.gov]



                TAX RELIEF FOR WORKING FAMILIES--PART II

  Mr. GRASSLEY. Mr. President, I rise to speak on the tax relief for 
working families that the Senate passed a few weeks ago and was signed 
into law by President Bush.
  This is the second in a series of speeches I am giving to highlight 
the details of this bipartisan tax cut that provided significant relief 
to millions of Americans.
  In today's speech I want to focus on the many provisions in the 
bipartisan bill that provide tax relief for working families and 
particularly families with children.
  First, I wish to discuss the efforts to address the marriage penalty 
that existed throughout the structure of the income tax. For far too 
many years, the Tax Code penalized working families where both the 
husband and wife work. It is simply wrong that we had a Tax Code that 
penalized marriage.
  The bipartisan tax cut completely ends the marriage penalty for many 
low- and middle-income families and makes significant strides in 
reducing the marriage penalty for all other families.
  This is accomplished through two actions. First, the bill provides 
that the standard deduction for those who are married filing jointly 
will be set at two times the rate of a single individual.
  For example, when everyone filed their tax returns this last April 
15, the standard deduction for singles was $4,400. However, the 
standard deduction for married filing jointly was only

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$7,350. If the new tax law had been fully enacted for tax year 2000, 
the standard deduction for married filing jointly would have been 
$8,800.
  The second step we took was for the 10 percent and 15 percent 
marginal rate brackets for married filing jointly to be set at two 
times the rate of a single individual.
  Again, to illustrate. If the first $6,000 of a single individual is 
taxed at 10 percent, then the first $12,000 of a married individual 
filing jointly will be taxed at 10 percent.
  These two efforts will provide complete elimination of the marriage 
penalty for low- and many middle-income working families and will also 
benefit married couples with higher incomes.
  Keep in mind, Mr. President, almost one-half of married couples take 
the standard deduction. These couples tend to be in the lower income 
brackets and they will get relief upfront.
  The doubling of the 10 percent marginal rate bracket is done 
immediately. The remainder of marriage penalty relief is phased in over 
several years. The increase in the standard deduction is phased in over 
a 5-year period beginning in 2005 and the doubling of the 15 percent 
rate bracket also is phased in beginning in 2005 and is phased in over 
a 4-year period.
  Many Senators were active in providing marriage penalty relief, but 
certainly Senator Hutchison of Texas was a leader in this issue.
  Mr. President, let me take a moment to address the point some pundits 
have made about the fact that some of the marriage penalty relief 
provisions, as well as other provisions in the bill, are phased in. The 
requirement of phase-ins simply reflects the reality of the guidance we 
were provided by the budget resolution.
  The budget resolution effectively requires us to phase in these, and 
other, provisions in the bipartisan tax bill. The budget resolution 
allows for more tax cuts over time as the economy grows and we see 
greater surpluses year-by-year.
  The last piece of the bill that addresses marriage penalty is an 
expansion of the earned income credit, EIC, for married families with 
children. The EIC provides a cash payment to low-income working 
families. EIC is targeted particularly to help working families with 
children.
  The EIC provision in the tax bill extends out the point at which the 
EIC begins to phase out for married families with children by $1,000 in 
2002 increased to $3,000 by 2008. For example, this year, the EIC 
begins to phase out for married families with two children at roughly 
$13,000 of income. Under the new law, next year, the phase out for EIC 
will be approximately $14,000.
  The EIC program directly benefits working families with children and 
this expansion sends a strong message to married couples that hard work 
will be rewarded under the tax code.
  The extension of the EIC is certainly a tribute to Senator Jeffords' 
hard work.
  All told, approximately $60 billion in tax reductions and outlays 
were devoted to addressing the marriage penalty. This bipartisan 
legislation provides marriage penalty relief to every family that pays 
income tax. In addition, millions of families who pay only payroll 
taxes, receive marriage penalty relief.
  This is the most significant marriage penalty relief in over 30 
years. And I would say 30 years is a long time. Finally, we're 
recognizing the value of marriage and stable families.
  Mr. President, I have outlined the efforts to address marriage 
penalty in the bipartisan tax bill, and as you can see these provisions 
are strongly geared toward providing relief for low-and middle-income 
married couples.
  Let me turn now, to another provision, the expansion of the child 
credit. The increase of the child credit will be a major benefit to the 
lives of millions of children in this country.
  Under prior law, the child credit is $500 and only available to 
families that pay income tax. Further, this child credit phases out for 
single parents with income over $75,000 and $110,000 for married 
individuals filing jointly.
  The bipartisan tax relief bill inreases the child credit to $600 
immediately, and over time increases it to $1,000.
  The bill protects middle income families from being hit by the 
alternative minimum tax, AMT, because of the child credit by making the 
child credit allowable against AMT. This provision helps ensure that 
middle-income families will realize the full benefit of the child 
credit. The AMT relief for middle-income families is due to Senator 
Lincoln's strong advocacy.
  In addition to increasing the child credit, the tax relief bill 
provides that millions of low-income children who previously did not 
benefit from the child credit because their parents did not have 
sufficient taxable income will now also benefit from the child credit. 
The bipartisan tax relief bill makes the child credit refundable for 16 
million kids.
  This expansion of the child credit program to low-income families 
happens immediately. I would say that this is a hallmark of the bill, 
that we sought to have provisions that help low- and middle-income 
families take place as soon as possible.
  The refundable child credit provides that for every $1,000 above 
$10,000 that a family with a child makes, they will get $100 in child 
credit, up to the maximum amount of the child credit. In essence, a 
bonus of 10 percent for every dollar the working family makes over 
$10,000. For example, a single mother with one child making $16,000 
will now get a check for $600. This is over and above the amount that 
single mother would receive from EIC. Thus, this single mother will pay 
no income taxes and will receive EIC as well as an additional $600.
  Mr. President, let me make that clear: Last year, that single mom did 
not get one dime of child credit, this year because of this legislation 
that working mother will get a check for $600.
  How many times have we heard complaints from the harsh critics of 
this legislation that it does nothing for those who pay only the 
payroll tax. That is just plain wrong. Under this legislation, the 
working mom, who pays no income tax receives a refund for this year of 
$600. Now, it doesn't come in the checks, but she gets it through an 
even bigger paycheck.
  Let's take a look at another example: Under this example, a married 
couple with two children making $20,000 will now get $1000 from the new 
expanded child credit and will also benefit from the expansion of the 
EIC for married couples with children. Again, that is $1000 that family 
did not receive last year and now will receive because of the 
bipartisan tax cut.
  Even better news for these families, the ten percent rate of payment 
for the child credit will increase from 10 percent to 15 percent in 
2005. For example, the single mother I cited above, would get a 15-
percent bonus for every dollar above $10,000 and given that the child 
credit will be increased to $700 in 2005, that single mother will 
receive the entire $700 child credit.
  It is estimated that 16 million children from low-income working 
families will benefit from this expansion of the child credit. We have 
a lot of complaints from the critics of this legislation that low-
income kids are left out. Nothing could be further from the truth. Let 
me report 16 million children benefit right away from this bipartisan 
legislation.
  There is no question that the expansion of the child credit and EIC 
is a tremendous benefit to millions of working families. Approximately 
$170 billion of the bipartisan tax relief bill is dedicated to the 
child tax credit.
  It is particularly vital that we make sure that hardworking families 
that pay no income tax are made aware of these new benefits that are 
available to them. It is also important that these families hear an 
important message of this bill: work pays.
  We have sent out a notice to millions of Americans who pay income tax 
telling them the check is in the mail. However, we haven't informed the 
millions of American families with children who work full-time, but do 
not pay income tax, about the enormous benefits this tax relief bill 
has for their families.
  I intend to write Secretary Thompson of HHS and Secretary O'Neill of

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Treasury encouraging them to seek avenues that will educate and inform 
working Americans about these new provisions that put real money in the 
pockets of working families. I am particularly concerned that there be 
outreach to the millions of new Americans that speak Spanish, 
Vietnamese, Russian, and dozens of other tongues.
  There is no doubt in my mind that this outreach to inform low-income 
families about the new child credit and expanded EIC is necessary. For 
clearly, anyone reading the New York Times or the Washington Post would 
have very little idea that the Congress passed, and President Bush 
signed into law, legislation that provides such great benefits to low-
income families.
  For example, the Washington Post on June 24, 2001, provided a summary 
of the tax provisions giving examples of the tax relief for different 
families at different incomes. Every example starts at $25,000 or 
higher.
  Not a single example is given of the benefits of this legislation for 
a mother making say $14,000, $16,000, or $18,000. Nor is there a single 
example of the benefits for a married couple with two children that is 
making $17,000, $25,000, or $30,000.
  I am stunned that these newspapers, that claim to be champions of 
working families, would completely ignore these major new benefits. 
Maybe the simple truth is they're a little embarrassed to admit that 
this bipartisan tax relief bill signed by President Bush actually does 
a great deal to help millions of working families that struggle to 
escape poverty.
  So clearly there is a need to educate and inform because the 
newspaper editors are deciding that ``all the news that's fit to 
print'' is only news of interest to their middle-income and high-income 
readers and not their low-income readers.
  Let me also add, that when we come to revisit welfare reform, I think 
it is important to bear in mind the billions of dollars that have been 
provided in this bill to encourage struggling families to enter the 
workforce or expand the number of hours they work. Too often, we get 
focused on the welfare-specific provisions and completely forget or 
ignore the major efforts to encourage work that are contained in the 
Tax Code.
  Mr. President, that highlights the significant efforts the tax bill 
had to expand and increase the child credit. While many Senators were 
advocates of increasing the already existing child credit, and several 
Senators supported expanding the child credit and making it 
refundable--there is no question that Senator Snowe was the key to 
making it a reality.
  Now, I would like to discuss the provisions in the bipartisan tax 
bill to help working families meet the costs of child care.
  The tax bill helps with the costs of child care in two provisions. 
First, the tax relief bill provides greater incentives for employer-
provided child care with the creation of a tax credit for employer-
provided child care facilities.
  The tax relief act provides taxpayers a tax credit equal to 25 
percent of qualified expenses for employer-provided child care and 10 
percent of qualified expenses for child care resource and referral 
services. The maximum credit is $150,000 per year. This is $1.4 billion 
in tax incentives to encourage businesses to assist in providing child 
care for their workers.
  This new tax initiative will help mothers and fathers to obtain child 
care--and hopefully child care near their place of work which will 
allow them the opportunity to spend more time with their children. 
Senator Kohl has long advocated this proposal and deserves great credit 
for making this part of the Tax Code.
  The second provision regarding child care expands the already 
existing dependent care tax credit. This is a tax credit that 
particularly helps low- and middle-income families who pay for child 
care for their young children.
  Thanks to Senator Jeffords' work, the bipartisan tax bill expands 
this program and will allow low and middle income families to take as a 
tax credit more of their costs of child care. The tax bill provides 
nearly $3 billion in additional tax relief for working families 
struggling to meet the costs of having their children in day care.
  Thus, the bipartisan tax bill helps working mothers and fathers by 
encouraging employers to provide child care and also easing the cost 
burden of child care.
  Let me turn now to the final provision I wish to discuss today in 
this speech that focuses on the provisions in the bipartisan tax relief 
bill that help working families and children. That provision is the 
expansion of the adoption tax credit.
  I have long been a strong advocate of encouraging adoptions and know 
it brings joy to the children and the families. I am very pleased that 
the tax bill provides significant encouragement for families to adopt 
and reduces the costs of adopting parents.
  Prior law provided for a $5,000 tax credit for qualified adoption 
expenses paid or incurred by a taxpayer in making an adoption. That 
amount was $6,000 for a special needs child. This full tax credit 
amount started to phaseout for taxpayers with modified adjusted gross 
income of over $75,000.
  I am very pleased that the bipartisan legislation signed by President 
Bush increases the tax credit up to $10,000 for qualified adoption 
expenses and $10,000 for special needs children, regardless of whether 
there are qualified adoption expenses.
  In addition, the new tax law expands the number of families eligible 
to take advantage of the adoption tax credit by having the credit begin 
to phaseout at $150,000 modified adjusted gross income.
  This is a major expansion of the adoption tax credit and provides 
over $3 billion in tax incentives for families to adopt. Senators Craig 
and Landrieu are to be commended for their efforts in this matter.
  Mr. President, that concludes my comments today on the tax relief 
act. As is plainly true, the tax relief accomplishes President Bush's 
goal of giving back the people's money. What is also plain and true is 
that a great deal of the tax relief is focused on helping working 
families with children.
  I know many in the Capitol are very upset about the bipartisan tax 
bill because the tax relief means less money for them to spend. 
Incredibly, the Democratic leader in the other body has called for a 
tax increase.
  But let me assure my colleagues, we do far better by allowing working 
families to keep more of their hard-earned money.
  The benefits of the tax relief bill will be realized in millions of 
small, unseen, quiet acts and decisions that don't make the evening 
news and unfortunately for the politicians, don't involve cutting 
ribbons and making speeches.
  I see working families now, because of the bipartisan tax bill, 
having more money in their pocket and being able to finally do the 
things they've planned or hoped for: be it buying a computer for their 
children; moving to a bigger apartment in a neighborhood with better 
schools; or purchasing healthier food for the dinner table.
  These are just a few examples of the multitude of priorities that 
only the families can best decide--and not the bureaucrats in 
Washington.
  It is my belief that with families getting to keep more of their 
hard-earned paycheck--the quiet talks at the kitchen table, after the 
children have been put to bed, will be more about opportunities and 
possibilities rather than fears and concerns.
  Mr. President, I hope this speech will make those who have recently 
called for a tax increase to think again. My hope is that they may now 
better appreciate the enormous benefits of this legislation and think 
long and hard before they try to undermine its accomplishments.
  The ACTING PRESIDENT pro tempore. The Senator from Montana.

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