[Congressional Record (Bound Edition), Volume 149 (2003), Part 10]
[Senate]
[Pages 13948-13958]
[From the U.S. Government Publishing Office, www.gpo.gov]




           TAX RELIEF, SIMPLIFICATION, AND EQUITY ACT OF 2003

  The PRESIDING OFFICER. Under the previous order, the clerk will 
report H.R. 1308.
  The legislative clerk read as follows:

       A bill (H.R. 1308) to amend the Internal Revenue Code of 
     1986 to end certain abusive tax practices, to provide tax 
     relief and simplification, and for other purposes.


                           Amendment No. 862

                (Purpose: In the nature of a substitute)

  Mr. GRASSLEY. I send an amendment to the desk and ask for its 
immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Ohio [Mr. Grassley], for himself, Mrs. 
     Lincoln, Ms. Snowe, Mr. Baucus, Mr. Voinovich, Ms. Murkowski, 
     Mr. Warner, Mr. Stevens, and Ms. Landrieu, proposes an 
     amendment numbered 862.

  Mr. GRASSLEY. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in today's Record under ``Text of 
Amendments.'')
  Mr. GRASSLEY. I am pleased to join my distinguished ranking member, 
Senator Baucus, in the agreement we have reached on the child tax 
credit. I wish to take a minute to fill in my colleagues on how we are 
at this place at this time on another tax bill.
  In the Finance Committee in the year 2001, Senator Snowe and Senator 
Lincoln added a refundable formula to enhance the child tax credit. 
This provision lasted through conference. The formula was increased to 
15 percent in 2005. President Bush proposed to accelerate the $1,000 
tax credit amount but did not accelerate the refundability formula.
  In the Finance Committee, we accelerated the refundability formula. 
Unfortunately, that provision was dropped in conference. At that 
disappointing moment and at times since, I have indicated that I would 
like to revive that formula. I was joined by several Finance Committee 
members and both leaders in attempting to resolve this problem.
  I am pleased to say this agreement moves the ball on the marriage 
penalty and the child tax credit. The relief is small but a start in 
addressing yet another marriage penalty.
  I applaud Senator Kay Bailey Hutchison for her steadfast interest in 
resolving this other marriage penalty provision.
  Finally, our agreement is offset with an extension of customs fees, 
user fees. I urge the House to respond on our action today.
  I would like to get the bill to the President. This will ensure that 
low-income families get the checks we expect to get out in the next few 
months that are related to the tax bill that the President signed last 
week. Without this additional provision we are working on now, we would 
have families who get an increase in the child credit of $400 per child 
get a check this summer, but we would not get checks to people who are 
entitled to the usual refundability because it was not extended.
  I would like to do a lot more on the child tax credit. Families 
should be able to rely on permanent tax relief. That is what the bill I 
introduced did--not this compromise before the Senate. That is close to 
what the Senate growth bill did. That is what we should do in the 
upcoming process on this legislation.
  I hope we resolve the refundability formula. We address the marriage 
penalty and the child tax credit and we make progress on the longer 
term child tax credit. We simplify the definition of a child. This last 
measure is the principal recommended simplification of the Tax Code for 
individuals. This recommendation comes from the Joint Committee on 
Taxation and the Treasury Department and is something that should have 
been done a long time ago.
  Today we make some major progress on simplifying the Tax Code. Of 
course, we need to do a lot more. This is what we do as we try to move 
forward on various pieces of legislation from the Finance Committee.
  In this bill we are also going to help those serving in the Armed 
Forces overseas. Because some of their remuneration is not considered 
income, they would not benefit from the child tax refund the same way 
as other people who are not in a war zone. We ought to change that and 
do change it so everybody is treated fairly.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, is it correct that the order provides for 
30 minutes equally divided?
  The PRESIDING OFFICER. That is correct.
  Mr. BAUCUS. I yield 10 minutes to the Senator from Arkansas. I might 
add, she is the prime mover of this bill. She is the one who made that 
happen. We are deeply indebted to her.
  Mrs. LINCOLN. Mr. President, I give special thanks to my colleague 
from Montana. There are many people to thank today for moving forward 
in the right direction, recognizing the working families of this 
country. I thank Chairman Grassley, who worked tirelessly with us, as 
well as the ranking member, Senator Baucus; certainly the leadership on 
both sides, Senator Frist and Senator Daschle, who have both been 
willing to work with all of us to come together on this agreement.
  I would also like to say a very special thanks to my colleague, 
Senator Olympia Snowe from Maine, who has been a wonderful colleague 
and certainly someone who has worked equally as hard as I have on this 
issue. I am very pleased to have worked with her, both now as well as 
in the past.
  If people can go back as far as 2001, they will remember in that 2001 
tax bill Senator Snowe and I worked hard to bring about the 
refundability of the child tax credit, recognizing and understanding 
working Americans all across this country, trying to raise their 
families, were in need of the kind of assistance that refundable child 
tax credit would bring to them. I am very pleased and honored to have 
worked with her in the great work she has done in this effort.
  I am certainly pleased that we have reached this agreement to restore 
the advanced refundability for the child credit, for the hard work 
Senator Grassley has done in bringing about the uniform definition of a 
``child'' in the Tax Code. To bring about those kinds of reforms are 
not easy steps. I think it is one of our first monumental moves in the 
right direction in which Senator Grassley will lead us in other reforms 
in the Tax Code.
  Certainly this agreement is the culmination of years of effort. I 
would like to recognize, however, and emphasize particularly the fact 
that we are helping working parents and working families. I know there 
are some critics out

[[Page 13949]]

there who have referred to these provisions as welfare. I just find 
that description so disheartening, since we are talking about 200,000 
military families, hundreds of firefighters, and teachers, and other 
hard-working Americans. I don't think of them, or view them, as welfare 
recipients. I don't think they think of themselves that way.
  These are taxpayers. They are hard-working families who pay sales 
tax, both State and local. They have payroll taxes that come out of 
their checks. They pay excise tax, and in many of our rural States that 
is an awful lot when they travel for miles to get from their homes to 
their jobs.
  It is so important for all of us to recognize that these taxes these 
individuals are paying are in equal proportion, many times, to many of 
the other people in different income and tax brackets, but these are 
taxes that never see cuts. Rarely do we see a cut in a sales tax or in 
the payroll tax, certainly, or in the State and local sales tax. In the 
excise taxes? We don't see cuts in these areas.
  Therefore, it is so important that we provide the kind of assistance 
we can for these working families, to make sure they are going to be 
able to help stimulate this economy and certainly to help strengthen 
our country.
  The news reports that followed the passage of the tax bill noted that 
families do receive a check of $400 in July. But they did neglect to 
mention those 12 million children who would not get those checks. I am 
so pleased that today we are recognizing it is not only an important 
issue to deal with, providing these 12 million children the kind of 
resources they need in their families to grow strong, to learn the 
values we want them to learn, to become good citizens and leaders and 
workers in this great Nation, but we are also recognizing the fairness 
of this issue in a timely way.
  I encourage my colleagues in the House in that they have that same 
opportunity to recognize this is a timely issue. If we want these 
working families to have that same benefit, to be able to receive that 
tax credit, that child benefit credit in the same timely way that other 
individuals will receive that tax relief, then we have to do it 
immediately. We do have to move forward quickly.
  I encourage my colleagues in the House to really take to heart the 
immediacy of this issue and help us move it forward quickly. The 
passage of this provision today is the first step in ensuring those 12 
million children will also get that $400 check, or whatever check they 
are entitled to--and it might be more--in July, at the same time others 
do. Time is definitely of the essence. I call on the Members of the 
other body to act quickly on this bill and ensure that all of our 
working families will benefit.
  The uniform definition of the child, as I mentioned, through Chairman 
Grassley's efforts and certainly those of many others, Senator Hatch 
and Senator Baucus, is a great inclusion in this measure.
  In short, this is a targeted tax provision to help working families. 
It is what I have argued since we began this round of tax discussions 
in January, and I hope we can continue in that vein.
  People ask, why is it so important? For me, that question is a very 
easy one to answer. Nearly half of the taxpayers in Arkansas have 
adjusted gross incomes of less than $20,000. Arkansas families were 
among some of the hardest hit when the refundable portion of the child 
credit was stripped from the bill. That is why it is important to me. 
It was important enough to bring up this issue and certainly to 
readdress something that did not happen in that original tax bill.
  Mr. President, 76,000 Arkansas families, 132,000 Arkansas children, 
were left behind in that final tax bill when it was signed. If that is 
not reason enough for me to cause a ruckus or to be persistent, I don't 
know what is. I appreciate the accolades from my colleagues, but really 
what is more important--I think it is essential that we recognize, when 
we take actions such as the recent tax bill, there is a lot of 
importance in the details. We have to recognize that when we do not pay 
attention to the details, there are many individuals who get left 
behind, who are not going to receive those benefits. This is one of 
those cases.
  I say to my colleagues, this is not about trying to create more debt 
for these children who will also inherit that debt later on; this is 
about taking something we could have done and we didn't, taking 
something we could do better, acknowledging it, and moving forward with 
the actions that will create that better circumstance for working 
families.
  That is why I have been working so hard these past few weeks--and for 
the last 3 years--recognizing what it means to the families in 
Arkansas.
  It is also important for all of us in the Senate, and in the 
Congress, as we move forward on very important legislation, such as the 
tax bill that was just signed into law, to put ourselves in the shoes 
of these families. We talk about raising our families. We talk about 
raising our children. We talk about what it takes to create a family 
atmosphere that is focused on values, that is focused on good manners, 
is focused on compassion and being part of a community, reaching out to 
one another. It means, too, that each of us has to recognize all of our 
families are faced with different circumstances, whether it is military 
personnel stationed in Iraq and leaving a wife and two children at 
home; whether it is a schoolteacher or a firefighter; whether it is a 
police officer, many of whom fall into this category that was left 
out--these who make $10,500 to $26,625. That doesn't seem to be a 
category that would include that many, but it does. These are essential 
people in our communities, those who are protecting us from fire and 
from criminal activity, those who are teaching our children, those who 
are stationed abroad and protecting our very freedoms. So it is so 
critical we put ourselves in their shoes and better understand what it 
is they are doing for their families.
  I have to say I have a good opportunity because when I take care of 
my family, I try to stop and think: Are there other mothers out there 
doing the same thing I am? Is it any different for a mother who is in 
the Senate than it is for a mother who is making $20,000, when you go 
to the store and you have to spend that week's paycheck on blue jeans 
and tennis shoes, a set of tires to make your automobile safe to get 
your children to and from school or yourself to and from work? There is 
not a lot of difference, regardless of who you are. Giving these 
individuals the ability to take care of those family needs is critical.
  We have not even talked about the aspect of how this can be a 
stimulative partner in what this overall tax bill was meant to do. It 
was meant to stimulate the economy. Why do we want to stimulate the 
economy anyway? We want to stimulate the economy because we want to 
strengthen our country, because we believe in this country and we 
believe in what makes up this country. There is no better place to 
look, in order to do that, than the American family.
  So I praise my colleagues today for recognizing that there are a 
world of families out there we can help today--mothers and fathers, 
working hard, playing by the rules at their jobs. They are not eligible 
for these credits unless they are working, unless they are bringing 
home earnings, and unless they have children.
  There is a whole group of individuals we could help here by giving 
them the opportunity to give something back to their country in 
strengthening this economy. Who else is going to be there to purchase 
the majority of items that will spur our economy and spur those 
companies that need to be driven?
  In conclusion, I applaud all of my colleagues. This has been a 
unified effort among many people to try to do the right thing. I think, 
after all, that is what we are here in the Senate to do--the right 
thing on behalf of the working families of this great Nation.
  Thank you, Mr. President.
  The PRESIDING OFFICER. Who yields time?
  Mr. GRASSLEY. Mr. President, I yield the Senator from Oklahoma 5 
minutes.

[[Page 13950]]

  The PRESIDING OFFICER. The Senator from Oklahoma is recognized.
  Mr. NICKLES. Mr. President, I am going to vote against this 
amendment.
  I want to state a few things. I would like to correct the Record and 
state a few facts. I have heard some people say this provision was 
stripped out of a provision in the tax bill and it therefore left low-
income people without any benefits from President Bush's tax cut. That 
is factually inaccurate. The fact is that in the year 2001 we passed a 
tax bill, and many of the people who complained mostly about this 
provision voted against the 2001 bill and the 2003 bill. Now they come 
back and say: You didn't do enough in this one category.
  We did a lot for low-income people. We reduced the tax rate from 15 
percent to 10 percent. And we did it retroactively, well after we 
passed the bill. We reduced that rate by a third--15 percent to 10 
percent--and did it retroactively. We reduced every other rate on the 
books by 1 percentage point. I just mention that. We did a lot.
  We increased the standard deduction by 20 percent. We increased the 
child tax credit from $500 to $1,000. It was $600. In the 2003 bill 
which the President just signed, we made it $1,000. That benefits 
families. It disproportionally benefits low-income people. We took 
millions of people off the tax rolls. They didn't have to pay taxes as 
a result of the fact that we reduced rates. And we passed tax credits. 
After we passed tax credits, millions of people who were taxpayers were 
no longer taxpayers.
  Then we get into the issue of refundability. We already have an 
unearned income tax credit, which is one of the most plagued, 
inaccurate programs we have in the Federal Government. It is about a 
$30 billion-a-year program. Its error rate is in the 20-some-odd 
percent range. About a fourth of it is in error. There is a lot of 
fraud. There are a lot of inaccuracies. People claim children they 
don't have so they can get a bigger refund. Maybe some of it was 
inaccurate and maybe some if it was on purpose.
  Some people say the Bush tax cut didn't benefit low-income families. 
That is factually incorrect. Let me give you an example. Before the 
Bush tax cut, if you had a low-income couple and both made minimum wage 
with a combined income of $21,000, they had personal exemptions--
talking about, let us say, a family of four--$12,200; a standard 
deduction of $7,900; their taxable income is $850 at 15 percent tax; 
their income tax was $128; and for their earned income credit, we would 
write a check for $2,888. They received a net income tax refund of 
$2,761. Somebody said they pay payroll taxes. Yes, they could. That is 
a total of $1,607. So they received $1,154 after they paid income taxes 
and payroll taxes.
  That was before President Bush's 2001 or 2003 tax bill passed. After 
the bills we just passed, they will receive a net refund in excess of 
income taxes and Social Security taxes of $2,332. That is a 102-percent 
increase. That is what the Government is writing them a check for. That 
is the amount left over after they paid income taxes and payroll taxes.
  The question we are now really debating is, Do we want to have the 
Federal Government write bigger checks, and have bigger negative income 
taxes? Do we want to try to make the Income Tax Code more progressive? 
Usually when they say that, they mean lower income people pay a greater 
percentage.
  Under present law, the upper 5 percent of the income tax bracket pay 
50 percent of the tax; the lower 50 percent of the income tax bracket 
pay 5 percent of the tax. Yet some people say that is not progressive 
enough; that we need to have Uncle Sam write bigger checks to people 
even in multiples of their payroll taxes and income taxes combined--not 
equal to, not balancing out payroll taxes, but we want to write them in 
multiples.
  Part of this amendment says let us increase the refundability far in 
excess of payroll and income taxes. I don't support that theory. That 
was in fact in the 2001 bill. Part of the tax bill we agreed to said we 
would have a percentage. The child tax credit would be refundable--10 
percent. And, oh yes, in the year 2005, we would make that 15 percent.
  The amendment on which we are going to vote would accelerate that 
reduction to 15 percent immediately. That would probably happen. It 
could have happened. It actually passed the Finance Committee and 
passed the floor of the Senate. Had we had greater support for the 
bill, it could have been in the conference report.
  I hope before final passage, we can make the child credit permanent. 
I hope when the bill comes back from conference, we will make permanent 
a $1,000 tax credit for all individuals. Then we can make this change 
in addition.
  I ask unanimous consent that the information titled ``Family of Four 
With Two Minimum Wage Workers'' be printed in the Record, along with 
the ``Child Credit/EIC Effect on Tax Burden'' information.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              FAMILY OF FOUR WITH TWO MINIMUM WAGE WORKERS
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                          PRE-2001 BUSH TAX CUT
 
Wages.......................................................    $21,000
Personal exemptions.........................................    (12,200)
Standard deduction..........................................     (7,950)
                                                             -----------
    Taxable Income..........................................        850
Tax rate....................................................      \1\15
Income Tax Before Credits...................................       (128)
Earned income credit........................................      2,888
Refundable child tax credit.................................  ..........
                                                             -----------
    Net Income Tax..........................................      2,761
    Payroll taxes...........................................     (1,607)
    Net Refund in Excess of All Taxes.......................      1,154
 
                         UNDER 2001 BUSH TAX CUT
 
Wages.......................................................    $21,000
Personal exemptions.........................................    (12,200)
Standard deduction..........................................     (9,500)
                                                             -----------
    Taxable Income..........................................  ..........
Tax rate....................................................      \1\10
Income Tax Before Credits...................................  ..........
Earned income credit........................................      2,888
Refundable child tax credit.................................      1,050
                                                             -----------
    Net Income Tax..........................................      3,938
    Payroll taxes...........................................     (1,607)
    Net Refund in Excess of All Taxes.......................      2,332
                                                             ===========
        Increase............................................     \1\102
------------------------------------------------------------------------
\1\Percent.
Staff estimates based on 2003 tax parameters, June 4, 2003.



                                      CHILD CREDIT/EIC EFFECT ON TAX BURDEN
----------------------------------------------------------------------------------------------------------------
                                     Tax before                  Child      Net income
            Wage income               credits        EIC         credit        tax      Payroll tax   Net taxes
----------------------------------------------------------------------------------------------------------------
                                           HEAD OF HOUSEHOLD--TWO KIDS
 
2,000.............................  ...........        (800)  ...........        (800)          153        (647)
4,000.............................  ...........      (1,600)  ...........      (1,600)          306      (1,294)
6,000.............................  ...........      (2,400)  ...........      (2,400)          459      (1,941)
8,000.............................  ...........      (3,200)  ...........      (3,200)          612      (2,588)
10,000............................  ...........      (4,000)  ...........      (4,000)          765      (3,235)
12,000............................  ...........      (4,204)        (150)      (4,354)          918      (3,436)
14,000............................  ...........      (4,204)        (350)      (4,554)        1,071      (3,483)
16,000............................  ...........      (3,942)        (550)      (4,492)        1,224      (3,268)
18,000............................          185      (3,522)        (750)      (4,087)        1,377      (2,710)
20,000............................          385      (3,102)        (950)      (3,667)        1,530      (2,137)
22,000............................          585      (2,682)      (1,150)      (3,247)        1,683      (1,564)
24,000............................          785      (2,262)      (1,350)      (2,827)        1,836        (991)
26,000............................          985      (1,842)      (1,550)      (2,407)        1,989        (418)
28,000............................        1,278      (1,422)      (1,750)      (1,894)        2,142         248
30,000............................        1,578      (1,002)      (1,950)      (1,374)        2,295         921
32,000............................        1,878        (582)      (2,000)        (704)        2,448       1,744
34,000............................        2,178        (162)      (2,000)          16         2,601       2,617
36,000............................        2,478  ...........      (2,000)         478         2,754       3,232
38,000............................        2,778  ...........      (2,000)         778         2,907       3,685

[[Page 13951]]

 
40,000............................        3,078  ...........      (2,000)       1,078         3,060       4,138
42,000............................        3,378  ...........      (2,000)       1,378         3,213       4,591
44,000............................        3,678  ...........      (2,000)       1,678         3,366       5,044
46,000............................        3,978  ...........      (2,000)       1,978         3,519       5,497
48,000............................        4,278  ...........      (2,000)       2,278         3,672       5,950
50,000............................        4,578  ...........      (2,000)       2,578         3,825       6,403
 
                                                MARRIED--TWO KIDS
 
2,000.............................  ...........        (800)  ...........        (800)          153        (647)
4,000.............................  ...........      (1,600)  ...........      (1,600)          306      (1,294)
6,000.............................  ...........      (2,400)  ...........      (2,400)          459      (1,941)
8,000.............................  ...........      (3,200)  ...........      (3,200)          612      (2,588)
10,000............................  ...........      (4,000)  ...........      (4,000)          765      (3,235)
12,000............................  ...........      (4,204)        (150)      (4,354)          918      (3,436)
14,000............................  ...........      (4,204)        (350)      (4,554)        1,071      (3,483)
16,000............................  ...........      (3,942)        (550)      (4,492)        1,224      (3,268)
18,000............................  ...........      (3,522)        (750)      (4,272)        1,377      (2,895)
20,000............................  ...........      (3,102)        (950)      (4,052)        1,530      (2,522)
22,000............................           30      (2,682)      (1,150)      (3,802)        1,683      (2,119)
24,000............................          230      (2,262)      (1,350)      (3,382)        1,836      (1,546)
26,000............................          430      (1,842)      (1,550)      (2,962)        1,989        (973)
28,000............................          630      (1,422)      (1,750)      (2,542)        2,142        (400)
30,000............................          830      (1,002)      (1,950)      (2,122)        2,295         174
32,000............................        1,030        (582)      (2,000)      (1,552)        2,448         897
34,000............................        1,230        (162)      (2,000)        (932)        2,601       1,670
36,000............................        1,445  ...........      (2,000)        (555)        2,754       2,199
38,000............................        1,745  ...........      (2,000)        (255)        2,907       2,652
40,000............................        2,045  ...........      (2,000)          45         3,060       3,105
42,000............................        2,345  ...........      (2,000)         345         3,213       3,558
44,000............................        2,645  ...........      (2,000)         645         3,366       4,011
46,000............................        2,945  ...........      (2,000)         945         3,519       4,464
48,000............................        3,245  ...........      (2,000)       1,245         3,672       4,917
50,000............................        3,545  ...........      (2,000)       1,545         3,825       5,370
----------------------------------------------------------------------------------------------------------------
Staff estimates based on 2003 tax parameters, provided by Senator Don Nickles, June 4, 2003.

  The PRESIDING OFFICER. Who yields time?
  Mr. NICKLES. I yield the Senator from Texas 2 minutes.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. Mr. President, I am certainly going to support this 
bill and this vehicle. But I did hold it up for a few hours because I 
am concerned that we are not able to put marriage penalty relief in a 
permanent position on this bill. However, I have an agreement with the 
majority leader that he will bring it up this year. Working with the 
distinguished chairman of the committee, and hopefully with the ranking 
member, we must fix the marriage penalty.
  What we have today is a situation in which we relieve the marriage 
penalty for 2 years, then for 4 years it comes back, then 2 years later 
it goes away, and then it comes back for good. This is outrageous. Our 
married couples do not need a rubber band; they need a Band-Aid. They 
need to be able to know that when they get married, it is not going to 
cost them $1,200 a year.
  Two Navy lieutenants will lose more than $1,500 a year if the 
marriage penalty goes away in 2 years; two Army warrant officers will 
lose $852 a year. This is not right. I have the commitment from 
leadership that we will take up a bill this year that fixes this 
inequity, and I hope there will be a bipartisan effort. We cannot let 
people be unsure about their marriage penalty relief.
  I thank the distinguished chairman of the Finance Committee and ask 
him if he will work with me to ensure that we take this up this year so 
we can get on and fix the child tax credit. Next on the agenda I hope 
will be marriage penalty relief.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I was a party to the conversation with 
the majority leader and the Senator from Texas. She has accurately 
stated what was discussed at that meeting. I will try my darnedest to 
fulfill it.
  Mrs. HUTCHISON. Thank you, Mr. President. I appreciate it very much. 
We will have marriage penalty relief permanent this year. And we will 
have child tax credit relief permanent, I hope, in the very near 
future.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I yield the Senator from Maine 2 
minutes.
  The PRESIDING OFFICER. The Senator from Maine.
  Ms. SNOWE. Mr. President, I thank Chairman Grassley for all of his 
efforts and endeavors to move quickly to address this omission in the 
growth package that passed the U.S. Congress recently. I appreciate the 
fact that he has worked hard to assist us in reaching an agreement on 
this vital issue.
  I also express my appreciation to the Senator from Montana, Mr. 
Baucus, in making the difference in bridging all of the efforts to 
reach this decision today in passing this legislation.
  I especially thank my colleague, Senator Lincoln, who has been a 
champion in this fight, both in the Senate Finance Committee on this 
issue and also on the refundability issue back in the 2001 tax cut, in 
which we included a refundable provision for the child tax credit. She 
certainly has been a strong ally and supporter, and I appreciate all of 
the efforts she has been involved in to make sure this accelerated 
refundability is a reality.
  I am pleased to have worked with all of my colleagues on this issue. 
I know it was not easy. There are differences on both sides with 
respect to some of these issues. But I think in the final analysis we 
are addressing an inequity that existed in the tax package that we 
passed in the Congress a few weeks ago. I think this agreement 
ultimately closes the fairness gap in economic relief for working 
American families. It ensures that 6.5 million families who were left 
out of the jobs and growth package enacted this year will now benefit 
from the child tax credit. And by acting so quickly, it will also 
ensure that these families will share in the rebate checks that 
qualifying families will receive in August under the growth package as 
well.
  This means 12 million children in low-income families will have the 
benefit of tax relief under the growth package. I think this is vitally 
important in redressing this wrong, in making sure we provide the kind 
of tax relief they deserve.
  Now, I heard here that working families don't shoulder the burden in 
the Federal Tax Code, but that isn't true. They do pay taxes. They pay 
payroll taxes. In fact, payroll taxes have become an inordinate burden 
on working families.
  The agreement ensures that 6.5 million low-income families who would 
have been left out of the jobs and growth packages enacted this month 
will now benefit from the child tax credit. And by acting quickly, it 
ensures these families will also share in the rebate checks qualifying 
families will receive in August under the growth package.
  This agreement would not have been possible without the tenacious 
leadership of Senate Majority Leader Frist,

[[Page 13952]]

and Minority Leader Daschle, who kept negotiations on track so the 
Senate could complete work this week. So I deeply appreciate their 
efforts.
  I thank my colleague, Senator Lincoln, who has been a tireless 
champion in this fight. From the time I first offered the refundable 
child tax credit to the 2001 tax bill, Sentor Lincoln has been a strong 
ally and supporter, and we worked together again this year to include 
refundability in the Finance Committee-passed growth package. Over the 
past week I have been proud to work with her once again to ensure 
families omitted from the child credit would receive the refundable 
credit they deserve.
  I thank Finance Chairman Grassley, who quickly stepped forward last 
week to address this omission from the jobs and growth package, and has 
worked so graciously with Senator Lincoln and me to achieve this 
agreement. He and Ranking Member Baucus have made the difference in 
bridging differences over this legislation, and we appreciate their 
sincere efforts.
  Today we join to finish the job that Senator Lincoln and I started in 
2001. At the signing of the Economic Growth and Tax Relief 
Reconciliation Act of 2001, which included the newly created partially 
refundable child tax credit, I wholeheartedly agreed with the President 
when he remarked that:

       Tax relief is a great achievement for the American people . 
     . . tax relief is an achievement for families struggling to 
     enter the middle class . . . (and) tax relief is 
     compassionate and it is now on the way.

  Those are the same reasons we introduced a bill along with Senators 
John Warner, Jack Reed, Jim Jeffords, and others to ensure that we are 
as compassionate today about our tax relief as we were then. This bill 
is responsible because it is fully offset, and it makes sense because 
it brings relief to working families while helping our economy.
  The Lincoln-Snowe bill incorporated in this package makes the child 
tax credit refundable for families earing between $10,500 and $26,625, 
helping 12 million children--6.5 million families--and almost 73,000 
children in my home State of Maine from nearly 44,000 families, who 
would not have received the full benefit under the original bill.
  But that is not all--in addition to helping working families we are 
also talking about military families, and this legislation will treat 
members of the military and their families more fairly as well. I know 
that as chair of the Senate Armed Services Committee, Senator Warner 
was deeply concerned about omitting the one million children living in 
active duty military and military veteran families. With this 
legislation, those families--including 900 in Maine--will now benefit 
from refundability. The bottom line is, these men and women have 
sacrificed for us, they deserve the credit--the child tax credit.
  Our legislation would accelerate the refundable portion of the child 
tax credit under law from 10 to 15 percent retroactive beginning 
January 1 of this year. This would ensure the hardworking mothers and 
fathers of America, including members of the Armed Forces who earn less 
than $26,000 per year, will be able to benefit from the increase in the 
child tax credit that has just become law. It will also ensure the 
provision of the 2001 law that directly benefits them will also be 
accelerated as the law enacted last week accelerates all of the other 
child tax credit provisions.
  I know some have said, this is tax relief for people who don't pay 
taxes. To that argument, I would point out two factors. First, the 
Federal income tax--while a large share of the tax burden facing 
Americans, are not the only taxes people pay. In fact, a larger tax 
burden on low-income workers is the payroll tax. The extent of this 
burden is exacerbated when one realizes that fully 33 percent of all 
jobs in my home State, for example, do not pay a livable wage.
  Secondly, while I believe that all families could use a helping hand 
when it comes to paying for the rising costs of raising a family, once 
again, the children who would benefit from the enactment of this bill 
are children in working families--families that do pay taxes and, just 
like everyone else in these trying economic times, these people are 
struggling to get by.
  Consider that, in order to be eligible for the partially refundable 
credit, a parent needs to surpass an income threshold that is currently 
at $10,500 per year. That means that a parent needs to work more than 
just a full-time minimum wage job. However, this provision benefits 
more than just minimum wage workers. This provision assists some of our 
younger families. For instance, the base pay for a first-year soldier 
is $16,000 and it affects workers in our health care and social service 
sectors, where, for instance, in Maine paramedics in 2001 were only 
making an average of $22,000, or where our home health aides were 
making only an average of $18,500 per year. These people are a critical 
part of our infrastructure and they deserve tax relief too.
  That is why I was disappointed the conferees chose to remove this 
provision from the jobs and growth package--a provision which was 
included in the bill both as it passed the Finance Committee, and when 
it was passed by the Senate. Today, we have the opportunity to take a 
step to correct this inequity.
  This bill also addresses provisions included in Chairman Grassley's 
proposal addressing the definition of a child in the Tax Code, and in 
addressing a marriage penalty under the original bill. The ``uniform 
definition of a child'' consolidates five separate definitions of a 
child in the Federal Tax Code, simplifying and clarifying the law. As a 
result, more families will more easily qualify for the benefits they 
need and deserve.
  Finally, the agreement will provide relief for married couples with 
children by addressing a marriage penalty under the existing child 
credit. Our agreement increases the threshold of the child tax credit 
for couples with children to $150,000.
  Importantly--and in keeping with the principles that have guided me 
throughout the budget and tax process this year--our bill pays for this 
tax relief by extending customs user fees that will expire this year 
and would need to be extended anyway. And in doing so we are not 
growing our already ballooning national deficit. This is critical in 
ensuring we do not add the debt burden on the very children that will 
benefit from this bill.
  Mr. President, Senate action today sends the message that relief for 
hardworking families won't take a back seat in America's tax code. It 
represents sound policy that Congress has already considered and 
adopted. It has the support of the White House, and I hope our 
colleagues in the House of Representatives will take up and pass this 
agreement promptly so it can be signed into law.
  Mr. LAUTENBERG. Mr. President, I rise to express my strong support 
for the Lincoln-Snowe amendment to H.R. 1308 to reinstate the child tax 
credit for low-income working Americans.
  The House and the Senate went to conference on the reconciliation 
bill. For the public at large, when we talk about a reconciliation 
bill, it is kind of arcane. The House and the Senate confer to get a 
bill together, with each side presenting the views of its Members. I am 
not sure I am making it more clear, but I want to make sure this is 
understood. When those conferees got together, they stripped out this 
tax credit for low-income working people. I thought that was a most 
outrageous act.
  The Bush tax cut bill was already a handout to wealthy elites. It 
threw token benefits to some others and virtually nothing to working 
people. Taking out the tax credit for families earning between $10,500 
a year and $26,625 a year added outrage to an insult.
  When the President was forced, as a result of the agreements in the 
Congress, to reduce the tax cut to $350 billion, he and the House 
Republicans had to search for about $30 billion in ``fat'' to cut out 
of the bill to meet that target. Why didn't they slow down the 
reduction in the top rate? It is a pretty easy thing to do. What did 
they do instead? They went after low-income working families.

[[Page 13953]]

  These are people who are working at or just above minimum wage. These 
are Americans who are feeding their families by laboring in cafeterias, 
cleaning offices, working late at night, working in the factories 
packing food or making clothing, working in retail chains and small 
stores across the country--jobs that are traditionally at the low end 
of the pay scale. These people work hard and are a significant part of 
our labor force.
  I know there are those in the administration who do not have any idea 
what it is like to work for low wages and try to raise a family on 
them. I learned what it was like from my parents, who were brought here 
as child immigrants. They knew what it was like and I knew what it was 
like because my parents were poor. They worked hard and tried to give 
their children an example of respect for hard work, and to hold out 
ideals, even though there was little money.
  The Lincoln-Snowe amendment is about restoring the American dream. It 
is about knowing that this country is a fair and honest place, where 
someone willing to work can still make a living. It is about knowing 
that this Government and this Congress respect hard work and loyalty to 
families. The Bush tax bill telegraphed a terrible shift in the message 
our Government is sending to the country. Despite the once revered view 
that hard work pays off and breeds respect, President Bush and the 
House Republicans failed to support that contention to millions of 
hard-working Americans.
  Why did they do it? Why did they drop a tax benefit that would have 
helped almost 12 million children who have low-income working parents? 
Why? The tax credit for hard-working minimum wage families was thrown 
overboard to make room for even more tax cuts for the highest income 
earners in our country. The cost of the tax credit to low-income 
families was $3.5 billion--not an insignificant sum by any means. But 
we could have found more than that by nicking the reduction to the top 
income tax rate by just a little bit.
  This is the rate the people at the top of the income scale will pay. 
We are talking about people who make over $1 million a year. We are 
talking about the top 1 percent of the country, households with average 
incomes over $350,000 or so. These are the people who are going to 
profit most from the President's tax cut. We are going to reduce the 
rate, the income tax rate that they will have to pay.
  If we only reduced that top rate to 35.3 percent instead of a flat 35 
percent for the years 2003 through 2005, we would have saved $3.9 
billion, and the cost of the tax credit for low-income families is $3.5 
billion. That is a lot of money. But not in the context of a $350 
billion tax cut package; it is only 1 percent. There would have been 
more than enough to save the child tax credit.
  White House spokesmen repeatedly claimed that President Bush's tax 
bill would provide a tax cut for every American taxpayer. But that was 
not true. The final bill left out 8 million working Americans and 
almost 12 million children. The wealthy certainly got their tax cut. It 
was approximately $90 billion in tax cuts over 10 years that will go to 
200,000 households nationwide with annual incomes of $1 million or 
more. That is about $450,000 per household.
  President Kennedy said, ``To govern is to choose.'' To give massive 
tax cuts to people who are already well off, and then tell hard-
working, low-income families, ``Sorry, there is nothing left for you,'' 
is awful. That is not a choice I want America to make.
  Fortunately, after some gentle pressure from the media and outraged 
constituents, the Republican majority has seen how egregious that plan 
was and they now support the Lincoln-Snowe amendment. It is about time 
we did something to help families who are struggling, and not just the 
fortunate few who are coasting. We have the opportunity to repair some 
of the harm caused by the President's unfair tax plan with this 
amendment. I urge its adoption.
  Mr. President, I yield the floor.
  Ms. COLLINS. Mr. President, I am pleased to be a cosponsor of this 
amendment offered today by Chairman Grassley, and to add my voice to 
those of my colleagues who have risen today in support of it. I have 
long been a supporter of the refundable child credit. I was a leading 
proponent of the increase in the child tax credit for low-income 
families that was enacted as part of the 2001 tax bill, and I strongly 
supported this provision when it was added to the Senate version of the 
Tax Act passed last month.
  The economic growth package the President signed into law last week 
gives tax relief to all working Americans, including low-income 
families, many of whom will see a substantial reduction in their taxes. 
But some low-income families could not receive the benefit of the 
increased child tax credit that the package provides because the 10 
percent earned-income threshold was not accelerated to 15 percent as 
the Senate version of the package provided. This amendment restores the 
acceleration of that threshold as this Chamber originally provided.
  More than 119,000 Mainers will benefit from the increase in the child 
tax credit that we approved as part of economic growth package. The 
action we take today expands the reach of this assistance to thousands 
more hard-working Maine families. As a member of the Senate Armed 
Services Committee, I was keenly aware that nearly 200,000 enlisted men 
and women could claim this credit for their children if we expanded the 
guidelines. Doing so sends exactly the right message of appreciation as 
many of them return home from fighting for the cause of freedom in 
Iraq.
  Mr. ROCKEFELLER. Mr. President, I am very pleased to support Senator 
Lincoln's legislation to make the recent increase in the child tax 
credit available to more families. I thank the Senator from Arkansas 
for her tenacious fight on behalf of America's working families. I was 
disappointed that the tax cuts passed by this Congress last month left 
out eight million children whose parents are working everyday and 
struggling to make ends meet. Today we will begin to correct that 
injustice.
  In West Virginia, there are about 57,000 children whose parents earn 
between $10,500 and $26,625. While these parents currently receive some 
benefit from the child tax credit, they do not stand to get any 
additional benefit based on last month's tax cut. For average families, 
who don't make money from dividends or capital gains, the child tax 
credit was the most valuable provision included in the recent tax cut 
package. The families of 57,000 West Virginia children should not be 
left out. Let's be clear that these families pay taxes. Payroll tax, 
sales tax, excise tax, property tax--these families are struggling to 
make ends meet, and they are paying their fair share in tax.
  It seems to me that families who are working hard but earning low 
wages are just the sort of families we ought to be seeking to help. 
These parents play by the rules, but struggle to provide the same 
things that all parents want to provide: enough food, a good home, 
schoolbooks, new shoes, perhaps a soccer uniform. In addition, we know 
that providing additional tax relief to these families will stimulate 
the economy, because these families are likely to immediately spend any 
additional cash.
  During the recent tax cut debate, the Senate was right to increase 
the amount of the child tax credit that low-income working families 
could receive. But during partisan negotiations to finalize that tax 
bill, these families were abandoned in order to provide more tax cuts 
to wealthy investors. One of the reasons that I opposed the recent tax 
cut package was that I could not condone a deal that provided $150 
billion in tax cuts to wealthy investors but dropped a provision to 
help our neediest working families that would cost just $3.5 billion. 
There are a lot of pieces of that deal that I wish we would undo. I 
realize that we won't. But at least today, by passing Senator Lincoln's 
legislation, we will take one important step toward making those tax 
cuts more fair for America's working families.
  The legislation before us today has a number of other important 
provisions.

[[Page 13954]]

It will ensure that two single parents would not lose their child tax 
credit if they got married. The bill also simplifies the tax code, 
something we should seek to do with every new tax law. I am especially 
pleased that the bill includes a provision to offset the cost of these 
new tax cuts. I have serious concerns about the record deficits we 
face, especially in light of the enormous tax cuts recently enacted. 
This bill will not add a penny to our national debt.
  In short, this is a balanced, responsible, and fair piece of 
legislation. While this bill does not do everything that I would like 
to do to improve the child tax credit and truly make it available to 
all low-income working families, it is still a major improvement on the 
tax cuts enacted last month. I hope that all of my colleagues will 
support this bill and send the message to hard working families that 
are struggling to make ends meet that we are on their side. And I ask 
all of my colleagues to encourage the House of Representatives to act 
quickly on this bill so that the President can sign it into law as soon 
as possible. Refund checks for the child tax credit increase are 
scheduled to be mailed this summer. If we act quickly we can ensure 
that an additional 8 million families will receive checks.
  Mr. WARNER. Mr. President, I am pleased to join Senator Blanche 
Lincoln and Senator Olympia Snowe in proposing important bipartisan 
legislation to accelerate the refundable portion of the child tax 
credit to low-income families. As chairman of the Senate Armed Services 
Committee, I have a special obligation to look after the welfare of the 
young men and women of the U.S. Armed Forces, up to 200,000 of whom 
could be eligible for and deserve this tax credit.
  Over the past few weeks, we in Congress, have worked hard to pass the 
economic stimulus package to promote long-term economic stability, and 
to stimulate investment and new job creation. While these provisions 
will provide substantial relief to America's families, our work is not 
yet complete.
  Included in the tax package were provisions to immediately increase 
the Child Tax Credit from $600 to $1,000 an important tax reform that 
we all support. However, the new law did not make the necessary 
technical changes in the refundability component which is necessary for 
certain low-income individuals to take advantage of the increase. I 
believe in providing fair and equitable tax relief to all Americans, 
especially to those raising children, our Nation's future.
  Providing tax relief is an important bipartisan achievement. Now we 
must build on this accomplishment by correcting this oversight and 
ensure that these hard working families are not ineligible for this 
needed benefit. The legislation I am cosponsoring will correct the 
inequity and provide low-income families, those who need it the most, 
the full tax credit.
  The bill accelerates the refundable part of the new $1,000 child tax 
credit provision from 10 to 15 percent, so American families in the 
$10,500 to $26,625 income bracket, who were not included in the new tax 
law, would receive the same benefits as those families with children in 
other brackets.
  The costs attributed to accelerating the child tax credit would be 
offset by closing corporate tax shelters. However, the important task 
before the Senate is to correct this oversight and provide these low-
income families with fairness and the ability to take advantage of the 
increase in the child tax credit.
  I am also cosponsoring related legislation introduced in the Senate 
by Finance Chairman Grassley to correct this issue and also to make the 
child tax credit and the refundable portion of the tax credit permanent 
law.
  It is my hope that we can pass either of these legislative proposals, 
or any other similar approach, to correct this inequity. We have a 
responsibility to American families trying to care for their children, 
using their resources as best they can, to provide fair and equal 
treatment under the Tax Code.
  The PRESIDING OFFICER. The Senator's time has expired.
  The Senator from Montana.
  Mr. BAUCUS. Mr. President, how much time remains on each side?
  The PRESIDING OFFICER. Three minutes 42 seconds credited to the 
Senator from Montana; 28 seconds to the Senator from Iowa.
  Mr. BAUCUS. Mr. President, I rise to support the bill offered by my 
good friend, the senior Senator from Arkansas, Mrs. Lincoln, and my 
good friend from Maine, Senator Snowe. Their legislation ensures that 
our military and low- and middle-income parents will receive a check 
from the child tax credit.
  The legislation repairs the damage done by the majority in the tax 
bill conference. Senator Lincoln was successful in getting this 
provision included in the $350 billion tax bill that passed the Finance 
Committee and the Senate. But the provision was specifically stripped 
out before passage of the final version of the $350 billion tax bill.
  Let me give you some examples of who does not benefit from the tax 
bill that was signed into law by President Bush last week.
  First, a 24-year-old single mom with one child. She works hard every 
day to put food on the table, buy clothes for her daughter, and ensure 
adequate childcare for her daughter while she is at work.
  She makes $15,000 a year. She pays $1,150 per year in payroll taxes. 
She pays $1,150 in Federal taxes yet gets zero benefit from the 
recently enacted tax bill. She will not see any check this summer.
  Taxes are taxes. I would like to see someone tell her that her 
payroll taxes are less of a burden to her than an equal amount of 
income taxes paid by Bill gates.
  Senators Lincoln and Snowe fixed that problem. The fix means $225 in 
her pocket this summer.
  She sees a big chunk of her paycheck every week getting paid to the 
Government. She also pays a lot of other taxes--including sales taxes, 
excise taxes, and property taxes. She deserves equal treatment.
  My second example illustrates the impact for military families. The 
Department of Defense has estimated that there are approximately 
192,000 military families who earn between $10,000 and $25,000. And 
most of those 192,000 military families will not receive any tax relief 
from the $350 billion tax bill.
  To make matters worse, the families of military personnel who are 
stationed in combat zones are really left out of the big tax cut.
  In my second example, a Marine gunnery sergeant with 8 years service 
is stationed in Afghanistan for the last 6 months of 2002, and in Iraq 
from January through March of 2003. She has two children.
  She receives an annual salary of $32,015 and hazardous duty pay of 
$150 per month. Because the income earned by our military while they 
are stationed in a combat zone is not included in taxable income, only 
$24,000 of her income is subject to tax. Under the bill that was passed 
last week, the check she gets this summer will only be $150.
  I am pleased that at least she will see something. But if the Lincoln 
child tax credit had been preserved in the $350 billion tax bill, this 
Marine gunnery sergeant and her family would receive a check for $800 
this summer just like the President has promised to other middle-income 
families. Unless we fix the problem, she will not see a dime of this.
  The Lincoln/Snowe legislation ensures that we count a soldier's 
combat zone compensation for purposes of the child tax credit, even 
though that income is excluded for purposes of the income tax.
  These examples illustrate just how unfair the tax bill was.
  The big tax bill was not fair to working Americans or our military 
personnel. Clearly, the benefits were skewed heavily to the elites of 
this country.
  One of the beauties of America is that we work to treat people 
equally. But the $350 billion tax bill did not come close to treating 
all Americans equally. Simply put, it was not fair.
  Instead, the choice was made to lower the tax for dividend and 
capital

[[Page 13955]]

gain income, rather than extend the child tax credit to hard-working, 
low-income taxpayers.
  The bill that returned from conference--the one that was signed into 
law--also stripped out other provisions to provide tax relief to those 
serving our country in the armed services--those serving in Iraq, in 
Afghanistan, and all across the globe.
  It is disturbing that we can pass this tax bill with all these 
benefits for the elite of our country. But the conferees specifically 
stripped out a provision that would exempt $6,000 of death benefit 
payments from income for our military families.
  And, they specifically stripped out the child tax credit provision 
that put money into the hands of our military and lower and middle-
income families.
  There is no way around it. The big tax bill was simply unfair.
  Senators Lincoln and Snowe are giving us the chance to right one of 
the wrongs--without increasing the deficit. Enactment of their 
legislation ensures that 12 million children are helped.
  Without their legislation, the families of 8 million children will 
see absolutely no benefit from the increased child credit that was 
signed into law last week. These families will not receive any check 
this summer.
  And, millions more families will see a check much smaller than the 
$400 promised.
  In Montana, 54,000 kids--fully one-quarter of the children in 
Montana--will not benefit from the $350 billion tax bill. But the 
Lincoln/Snowe legislation would get a check out--this summer--to the 
working parents of thousands of Montana children.
  Their legislation gets the child tax credit to millions of parents--
without saddling their children with huge Government deficits--and 
without robbing the Social Security trust fund. They fix a $3.5 billion 
problem, and pay for it.
  Unfortunately, some in the Republican leadership considered using 
this as an opportunity to spend another $130 billion in tax cuts. That 
was their idea of a ``fix.''
  Moreover, they did not intend to pay for these extra tax cuts. 
Instead they wanted our children and grandchildren and our Nation's 
seniors to shoulder more of the burden.
  In the past couple of days, we have been able to reach an agreement 
to correct the wrong created with the passage of the recent tax bill. I 
strongly support the Lincoln/Snowe child tax credit legislation. I urge 
my colleagues to stand united to get this legislation enacted into law 
this week. These families should not be asked to wait any longer.
  They deserve to get their check this summer--just like all of the 
parents who were taken care of under the $350 billion tax bill.
  This is the right thing to do. This is the fair thing to do. This is 
the moral thing to do.
  Again, I thank the Senator from Arkansas, Mrs. Lincoln. She has done 
a terrific job highlighting this issue and the need for this child tax 
credit provision.
  Second, Senator Snowe, as I have mentioned several times, has been 
tremendous in championing this cause. And I might say, with regard to 
the 2001 tax bill, she deserves the lion's share of the credit for the 
child tax credit provisions that are in that bill.
  The chairman of the committee, Senator Grassley, has been, as usual, 
just his terrific self in working with the various Senators to try to 
find an accommodation that makes sense.
  I also thank Senator Warner who focused on the impact of this bill on 
military families. In that respect, the bill will permit thousands of 
military families, especially those serving in combat zones, to benefit 
from the child credit. Without this provision in this pending measure, 
those military families would not get the benefit of the credit.
  Finally--I know time is of the essence here--it is imperative that 
the House act on this matter within 2 weeks so that the checks can get 
to the millions of families covered by this bill. Otherwise, two sets 
of checks would have to be sent out, and I think that would be the 
height of inefficiency and a waste on the part of Uncle Sam. That would 
be the consequence of the failure of the other body to act within 2 
weeks. So I call on the House to act.
  I see the Senator from Virginia, the chairman of the Armed Services 
Committee. I yield the rest of any time I have to him.
  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. WARNER. I thank the distinguished Senator.
  Mr. President, I am not here to in any way suggest what went right, 
what went wrong. My understanding is there is a reconciliation of 
viewpoints now. We have before us the opportunity to provide for this 
child tax credit for a category of individuals who, for reasons that I 
am certain the record explains, were preempted from the legislation.
  Upon learning this, as others did--largely through press accounts--I 
immediately called my distinguished chairman, Mr. Grassley; I called my 
distinguished friend from Oklahoma, Senator Nickles; I called Mrs. 
Lincoln and could not get a phone through to Montana, but I made an 
effort to try to reach you.
  Mr. BAUCUS. I beg your pardon.
  Mr. WARNER. Rural electrification.
  But anyway, Mr. President, I feel very strongly that the men and 
women of the Armed Forces--some 200,000-plus families--very much need 
this benefit. They are the ones who have fought in Iraq and Afghanistan 
and who are all throughout the world taking risks, basically, the 
enlisted ranks.
  I feel strongly that this great institution--the Senate--wants to be 
on record that one of the reasons to go forward, hopefully, and adopt 
the measure now pending before us is on behalf of the men and women of 
the Armed Forces of the United States.
  I thank the Chair and I yield back such time as I might have.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I yield back the remainder of my time.
  The PRESIDING OFFICER. Does the Senator from Iowa yield back his 
remaining time?
  The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I yield back the remaining amount of my 
time.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
862.
  Mr. BAUCUS. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. McCONNELL. I announce that the Senator from Nevada (Mr. Ensign 
and the Senator from Alaska (Ms. Murkowski) are necessarily absent.
  Mr. REID. I announce that the Senator from Florida (Mr. Graham) and 
the Senator from Hawaii (Mr. Inouye) are necessarily absent.
  I further announce that, if present and voting, the Senator from 
Florida (Mr. Graham) would vote ``yea.''
  The PRESIDING OFFICER (Mr. Chambliss). Are there any other Senators 
in the Chamber desiring to vote?
  The result was announced--yeas 94, nays 2, as follows:

                      [Rollcall Vote No. 210 Leg.]

                                YEAS--94

     Akaka
     Alexander
     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Cantwell
     Carper
     Chafee
     Chambliss
     Clinton
     Cochran
     Coleman
     Collins
     Conrad
     Cornyn
     Corzine
     Craig
     Crapo
     Daschle
     Dayton
     DeWine
     Dodd
     Dole
     Domenici
     Dorgan
     Durbin
     Edwards
     Enzi
     Feingold
     Feinstein
     Fitzgerald
     Frist
     Graham (SC)
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Hollings
     Hutchison
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Mikulski
     Miller
     Murray
     Nelson (FL)
     Nelson (NE)
     Pryor
     Reed
     Reid
     Roberts
     Rockefeller
     Santorum
     Sarbanes
     Schumer

[[Page 13956]]


     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stabenow
     Stevens
     Sununu
     Talent
     Thomas
     Voinovich
     Warner
     Wyden

                                NAYS--2

     Inhofe
     Nickles
       

                             NOT VOTING--4

     Ensign
     Graham (FL)
     Inouye
     Murkowski
  The amendment (No. 862) was agreed to.
  Mrs. LINCOLN. Mr. President, I move to reconsider the vote, and I 
move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER (Mr. Sessions). Under the previous order, the 
question is on the engrossment of the amendment and third reading of 
the bill.
  The amendment was ordered to be engrossed, and the bill to be read 
the third time.
  The bill was read the third time.
  The PRESIDING OFFICER. The bill, as amended, having been read the 
third time, the question is, Shall it pass?
  The bill (H.R. 1308), as amended, was passed, as follows:

       Resolved, That the bill from the House of Representatives 
     (H.R. 1308) entitled ``An Act to amend the Internal Revenue 
     Code of 1986 to end certain abusive tax practices, to provide 
     tax relief and simplification, and for other purposes.'', do 
     pass with the following amendments:
       Strike out all after the enacting clause and insert:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Relief for Working Families 
     Tax Act of 2003''.

                       TITLE I--CHILD TAX CREDIT

     SEC. 101. ACCELERATION OF INCREASE IN REFUNDABILITY OF THE 
                   CHILD TAX CREDIT.

       (a) Acceleration of Refundability.--
       (1) In general.--Section 24(d)(1)(B)(i) of the Internal 
     Revenue Code of 1986 (relating to portion of credit 
     refundable) is amended by striking ``(10 percent in the case 
     of taxable years beginning before January 1, 2005)''.
       (2) Advance payment.--Subsection (b) of section 6429 of 
     such Code (relating to advance payment of portion of 
     increased child credit for 2003) is amended by striking 
     ``and'' at the end of paragraph (2), by striking the period 
     at the end of paragraph (3) and inserting ``, and'', and by 
     adding at the end the following new paragraph:
       ``(4) section 24(d)(1)(B)(i) applied without regard to the 
     first parenthetical therein.''.
       (3) Earned income includes combat pay.--Section 24(d)(1) of 
     such Code is amended by adding at the end the following new 
     sentence: ``For purposes of subparagraph (B), any amount 
     excluded from gross income by reason of section 112 shall be 
     treated as earned income which is taken into account in 
     computing taxable income for the taxable year.''.
       (b) Effective Dates.--
       (1) Subsections (a)(1) and (a)(3).--The amendments made by 
     subsections (a)(1) and (a)(3) shall apply to taxable years 
     beginning after December 31, 2002.
       (2) Subsection (a)(2).--The amendments made by subsection 
     (a)(2) shall take effect as if included in the amendments 
     made by section 101(b) of the Jobs and Growth Tax Relief 
     Reconciliation Act of 2003.

     SEC. 102. REDUCTION IN MARRIAGE PENALTY IN CHILD TAX CREDIT.

       (a) In General.--Section 24(b)(2) of the Internal Revenue 
     Code of 1986 (defining threshold amount) is amended--
       (1) by inserting ``($115,000 for taxable years beginning in 
     2008 or 2009, and $150,000 for taxable years beginning in 
     2010)'' after ``$110,000'', and
       (2) by striking ``$55,000'' in subparagraph (C) and 
     inserting ``\1/2\ of the amount in effect under subparagraph 
     (A)''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.

     SEC. 103. APPLICATION OF EGTRRA SUNSET TO THIS SECTION.

       Each amendment made by this title shall be subject to title 
     IX of the Economic Growth and Tax Relief Reconciliation Act 
     of 2001 to the same extent and in the same manner as the 
     provision of such Act to which such amendment relates.

                 TITLE II--UNIFORM DEFINITION OF CHILD

     SEC. 201. UNIFORM DEFINITION OF CHILD, ETC.

       Section 152 of the Internal Revenue Code of 1986 is amended 
     to read as follows:

     ``SEC. 152. DEPENDENT DEFINED.

       ``(a) In General.--For purposes of this subtitle, the term 
     `dependent' means--
       ``(1) a qualifying child, or
       ``(2) a qualifying relative.
       ``(b) Exceptions.--For purposes of this section--
       ``(1) Dependents ineligible.--If an individual is a 
     dependent of a taxpayer for any taxable year of such taxpayer 
     beginning in a calendar year, such individual shall be 
     treated as having no dependents for any taxable year of such 
     individual beginning in such calendar year.
       ``(2) Married dependents.--An individual shall not be 
     treated as a dependent of a taxpayer under subsection (a) if 
     such individual has made a joint return with the individual's 
     spouse under section 6013 for the taxable year beginning in 
     the calendar year in which the taxable year of the taxpayer 
     begins.
       ``(3) Citizens or nationals of other countries.--
       ``(A) In general.--The term `dependent' does not include an 
     individual who is not a citizen or national of the United 
     States unless such individual is a resident of the United 
     States or a country contiguous to the United States.
       ``(B) Exception for adopted child.--Subparagraph (A) shall 
     not exclude any child of a taxpayer (within the meaning of 
     subsection (f)(1)(B)) from the definition of `dependent' if--
       ``(i) for the taxable year of the taxpayer, the child's 
     principal place of abode is the home of the taxpayer, and
       ``(ii) the taxpayer is a citizen or national of the United 
     States.
       ``(c) Qualifying Child.--For purposes of this section--
       ``(1) In general.--The term `qualifying child' means, with 
     respect to any taxpayer for any taxable year, an individual--
       ``(A) who bears a relationship to the taxpayer described in 
     paragraph (2),
       ``(B) who has the same principal place of abode as the 
     taxpayer for more than one-half of such taxable year,
       ``(C) who meets the age requirements of paragraph (3), and
       ``(D) who has not provided over one-half of such 
     individual's own support for the calendar year in which the 
     taxable year of the taxpayer begins.
       ``(2) Relationship test.--For purposes of paragraph (1)(A), 
     an individual bears a relationship to the taxpayer described 
     in this paragraph if such individual is--
       ``(A) a child of the taxpayer or a descendant of such a 
     child, or
       ``(B) a brother, sister, stepbrother, or stepsister of the 
     taxpayer or a descendant of any such relative.
       ``(3) Age requirements.--
       ``(A) In general.--For purposes of paragraph (1)(C), an 
     individual meets the requirements of this paragraph if such 
     individual--
       ``(i) has not attained the age of 19 as of the close of the 
     calendar year in which the taxable year of the taxpayer 
     begins, or
       ``(ii) is a student who has not attained the age of 24 as 
     of the close of such calendar year.
       ``(B) Special rule for disabled.--In the case of an 
     individual who is permanently and totally disabled (as 
     defined in section 22(e)(3)) at any time during such calendar 
     year, the requirements of subparagraph (A) shall be treated 
     as met with respect to such individual.
       ``(4) Special rule relating to 2 or more claiming 
     qualifying child.--
       ``(A) In general.--Except as provided in subparagraph (B) 
     and subsection (e), if (but for this paragraph) an individual 
     may be and is claimed as a qualifying child by 2 or more 
     taxpayers for a taxable year beginning in the same calendar 
     year, such individual shall be treated as the qualifying 
     child of the taxpayer who is--
       ``(i) a parent of the individual, or
       ``(ii) if clause (i) does not apply, the taxpayer with the 
     highest adjusted gross income for such taxable year.
       ``(B) More than 1 parent claiming qualifying child.--If the 
     parents claiming any qualifying child do not file a joint 
     return together, such child shall be treated as the 
     qualifying child of--
       ``(i) the parent with whom the child resided for the 
     longest period of time during the taxable year, or
       ``(ii) if the child resides with both parents for the same 
     amount of time during such taxable year, the parent with the 
     highest adjusted gross income.
       ``(d) Qualifying Relative.--For purposes of this section--
       ``(1) In general.--The term `qualifying relative' means, 
     with respect to any taxpayer for any taxable year, an 
     individual--
       ``(A) who bears a relationship to the taxpayer described in 
     paragraph (2),
       ``(B) whose gross income for the calendar year in which 
     such taxable year begins is less than the exemption amount 
     (as defined in section 151(d)),
       ``(C) with respect to whom the taxpayer provides over one-
     half of the individual's support for the calendar year in 
     which such taxable year begins, and
       ``(D) who is not a qualifying child of such taxpayer or of 
     any other taxpayer for any taxable year beginning in the 
     calendar year in which such taxable year begins.
       ``(2) Relationship.--For purposes of paragraph (1)(A), an 
     individual bears a relationship to the taxpayer described in 
     this paragraph if the individual is any of the following with 
     respect to the taxpayer:
       ``(A) A child or a descendant of a child.
       ``(B) A brother, sister, stepbrother, or stepsister.
       ``(C) The father or mother, or an ancestor of either.
       ``(D) A stepfather or stepmother.
       ``(E) A son or daughter of a brother or sister of the 
     taxpayer.
       ``(F) A brother or sister of the father or mother of the 
     taxpayer.
       ``(G) A son-in-law, daughter-in-law, father-in-law, mother-
     in-law, brother-in-law, or sister-in-law.
       ``(H) An individual (other than an individual who at any 
     time during the taxable year was

[[Page 13957]]

     the spouse, determined without regard to section 7703, of the 
     taxpayer) who, for the taxable year of the taxpayer, has as 
     such individual's principal place of abode the home of the 
     taxpayer and is a member of the taxpayer's household.
       ``(3) Special rule relating to multiple support 
     agreements.--For purposes of paragraph (1)(C), over one-half 
     of the support of an individual for a calendar year shall be 
     treated as received from the taxpayer if--
       ``(A) no one person contributed over one-half of such 
     support,
       ``(B) over one-half of such support was received from 2 or 
     more persons each of whom, but for the fact that any such 
     person alone did not contribute over one-half of such 
     support, would have been entitled to claim such individual as 
     a dependent for a taxable year beginning in such calendar 
     year,
       ``(C) the taxpayer contributed over 10 percent of such 
     support, and
       ``(D) each person described in subparagraph (B) (other than 
     the taxpayer) who contributed over 10 percent of such support 
     files a written declaration (in such manner and form as the 
     Secretary may by regulations prescribe) that such person will 
     not claim such individual as a dependent for any taxable year 
     beginning in such calendar year.
       ``(4) Special rule relating to income of handicapped 
     dependents.--
       ``(A) In general.--For purposes of paragraph (1)(B), the 
     gross income of an individual who is permanently and totally 
     disabled (as defined in section 22(e)(3)) at any time during 
     the taxable year shall not include income attributable to 
     services performed by the individual at a sheltered workshop 
     if--
       ``(i) the availability of medical care at such workshop is 
     the principal reason for the individual's presence there, and
       ``(ii) the income arises solely from activities at such 
     workshop which are incident to such medical care.
       ``(B) Sheltered workshop defined.--For purposes of 
     subparagraph (A), the term `sheltered workshop' means a 
     school--
       ``(i) which provides special instruction or training 
     designed to alleviate the disability of the individual, and
       ``(ii) which is operated by an organization described in 
     section 501(c)(3) and exempt from tax under section 501(a), 
     or by a State, a possession of the United States, any 
     political subdivision of any of the foregoing, the United 
     States, or the District of Columbia.
       ``(5) Special support test in case of students.--For 
     purposes of paragraph (1)(C), in the case of an individual 
     who is--
       ``(A) a child of the taxpayer, and
       ``(B) a student,

     amounts received as scholarships for study at an educational 
     organization described in section 170(b)(1)(A)(ii) shall not 
     be taken into account in determining whether such individual 
     received more than one-half of such individual's support from 
     the taxpayer.
       ``(6) Special rules for support.--For purposes of this 
     subsection--
       ``(A) payments to a spouse which are includible in the 
     gross income of such spouse under section 71 or 682 shall not 
     be treated as a payment by the payor spouse for the support 
     of any dependent,
       ``(B) amounts expended for the support of a child or 
     children shall be treated as received from the noncustodial 
     parent (as defined in subsection (e)(3)(B)) to the extent 
     that such parent provided amounts for such support, and
       ``(C) in the case of the remarriage of a parent, support of 
     a child received from the parent's spouse shall be treated as 
     received from the parent.
       ``(e) Special Rule for Divorced Parents.--
       ``(1) In general.--Notwithstanding subsection (c)(4) or 
     (d)(1)(C), if--
       ``(A) a child receives over one-half of the child's support 
     during the calendar year from the child's parents--
       ``(i) who are divorced or legally separated under a decree 
     of divorce or separate maintenance,
       ``(ii) who are separated under a written separation 
     agreement, or
       ``(iii) who live apart at all times during the last 6 
     months of the calendar year, and
       ``(B) such child is in the custody of 1 or both of the 
     child's parents for more than \1/2\ of the calendar year,

     such child shall be treated as being the qualifying child or 
     qualifying relative of the noncustodial parent for a calendar 
     year if the requirements described in paragraph (2) are met.
       ``(2) Requirements.--For purposes of paragraph (1), the 
     requirements described in this paragraph are met if--
       ``(A) a decree of divorce or separate maintenance or 
     written separation agreement between the parents applicable 
     to the taxable year beginning in such calendar year provides 
     that--
       ``(i) the noncustodial parent shall be entitled to any 
     deduction allowable under section 151 for such child, or
       ``(ii) the custodial parent will sign a written declaration 
     (in such manner and form as the Secretary may prescribe) that 
     such parent will not claim such child as a dependent for such 
     taxable year, and
       ``(B) in the case of such an agreement executed before 
     January 1, 1985, the noncustodial parent provides at least 
     $600 for the support of such child during such calendar year.
       ``(3) Custodial parent and noncustodial parent.--For 
     purposes of this subsection--
       ``(A) Custodial parent.--The term `custodial parent' means 
     the parent with whom a child shared the same principal place 
     of abode for the greater portion of the calendar year.
       ``(B) Noncustodial parent.--The term `noncustodial parent' 
     means the parent who is not the custodial parent.
       ``(4) Exception for multiple-support agreements.--This 
     subsection shall not apply in any case where over one-half of 
     the support of the child is treated as having been received 
     from a taxpayer under the provision of subsection (d)(3).
       ``(f) Other Definitions and Rules.--For purposes of this 
     section--
       ``(1) Child defined.--
       ``(A) In general.--The term `child' means an individual who 
     is--
       ``(i) a son, daughter, stepson, or stepdaughter of the 
     taxpayer, or
       ``(ii) an eligible foster child of the taxpayer.
       ``(B) Adopted child.--In determining whether any of the 
     relationships specified in subparagraph (A)(i) or paragraph 
     (4) exists, a legally adopted individual of the taxpayer, or 
     an individual who is placed with the taxpayer by an 
     authorized placement agency for adoption by the taxpayer, 
     shall be treated as a child of such individual by blood.
       ``(C) Eligible foster child.--For purposes of subparagraph 
     (A)(ii), the term `eligible foster child' means an individual 
     who is placed with the taxpayer by an authorized placement 
     agency or by judgment, decree, or other order of any court of 
     competent jurisdiction.
       ``(2) Student defined.--The term `student' means an 
     individual who during each of 5 calendar months during the 
     calendar year in which the taxable year of the taxpayer 
     begins--
       ``(A) is a full-time student at an educational organization 
     described in section 170(b)(1)(A)(ii), or
       ``(B) is pursuing a full-time course of institutional on-
     farm training under the supervision of an accredited agent of 
     an educational organization described in section 
     170(b)(1)(A)(ii) or of a State or political subdivision of a 
     State.
       ``(3) Place of abode.--An individual shall not be treated 
     as having the same principal place of abode of the taxpayer 
     if at any time during the taxable year of the taxpayer the 
     relationship between the individual and the taxpayer is in 
     violation of local law.
       ``(4) Brother and sister.--The terms `brother' and `sister' 
     include a brother or sister by the half blood.
       ``(5) Treatment of missing children.--
       ``(A) In general.--Solely for the purposes referred to in 
     subparagraph (B), a child of the taxpayer--
       ``(i) who is presumed by law enforcement authorities to 
     have been kidnapped by someone who is not a member of the 
     family of such child or the taxpayer, and
       ``(ii) who had, for the taxable year in which the 
     kidnapping occurred, the same principal place of abode as the 
     taxpayer for more than one-half of the portion of such year 
     before the date of the kidnapping,

     shall be treated as meeting the requirement of subsection 
     (c)(1)(B) with respect to a taxpayer for all taxable years 
     ending during the period that the individual is kidnapped.
       ``(B) Purposes.--Subparagraph (A) shall apply solely for 
     purposes of determining--
       ``(i) the deduction under section 151(c),
       ``(ii) the credit under section 24 (relating to child tax 
     credit),
       ``(iii) whether an individual is a surviving spouse or a 
     head of a household (as such terms are defined in section 2), 
     and
       ``(iv) the earned income credit under section 32.
       ``(C) Comparable treatment of certain qualifying 
     relatives.--For purposes of this section, a child of the 
     taxpayer--
       ``(i) who is presumed by law enforcement authorities to 
     have been kidnapped by someone who is not a member of the 
     family of such child or the taxpayer, and
       ``(ii) who was (without regard to this paragraph) a 
     qualifying relative of the taxpayer for the portion of the 
     taxable year before the date of the kidnapping,
     shall be treated as a qualifying relative of the taxpayer for 
     all taxable years ending during the period that the child is 
     kidnapped.
       ``(D) Termination of treatment.--Subparagraphs (A) and (C) 
     shall cease to apply as of the first taxable year of the 
     taxpayer beginning after the calendar year in which there is 
     a determination that the child is dead (or, if earlier, in 
     which the child would have attained age 18).
       ``(6) Cross references.--

``For provision treating child as dependent of both parents for 
purposes of certain provisions, see sections 105(b), 132(h)(2)(B), and 
213(d)(5).''.

     SEC. 202. MODIFICATIONS OF DEFINITION OF HEAD OF HOUSEHOLD.

       (a) Head of Household.--Clause (i) of section 2(b)(1)(A) of 
     the Internal Revenue Code of 1986 is amended to read as 
     follows:
       ``(i) a qualifying child of the individual (as defined in 
     section 152(c), determined without regard to section 152(e)), 
     but not if such child--

       ``(I) is married at the close of the taxpayer's taxable 
     year, and
       ``(II) is not a dependent of such individual by reason of 
     section 152(b)(2) or 152(b)3), or both, or''.

       (b) Conforming Amendments.--
       (1) Section 2(b)(2) of the Internal Revenue Code of 1986 is 
     amended by striking subparagraph (A) and by redesignating 
     subparagraphs (B), (C), and (D) as subparagraphs (A), (B), 
     and (C), respectively.
       (2) Clauses (i) and (ii) of section 2(b)(3)(B) of such Code 
     are amended to read as follows:

[[Page 13958]]

       ``(i) subparagraph (H) of section 152(d)(2), or
       ``(ii) paragraph (3) of section 152(d).''.

     SEC. 203. MODIFICATIONS OF DEPENDENT CARE CREDIT.

       (a) In General.--Section 21(a)(1) of the Internal Revenue 
     Code of 1986 is amended by striking ``In the case of an 
     individual who maintains a household which includes as a 
     member one or more qualifying individuals (as defined in 
     subsection (b)(1))'' and inserting ``In the case of an 
     individual for which there are 1 or more qualifying 
     individuals (as defined in subsection (b)(1)) with respect to 
     such individual''.
       (b) Qualifying Individual.--Paragraph (1) of section 21(b) 
     of the Internal Revenue Code of 1986 is amended to read as 
     follows:
       ``(1) Qualifying individual.--The term `qualifying 
     individual' means--
       ``(A) a dependent of the taxpayer (as defined in section 
     152(a)(1)) who has not attained age 13,
       ``(B) a dependent of the taxpayer who is physically or 
     mentally incapable of caring for himself or herself and who 
     has the same principal place of abode as the taxpayer for 
     more than one-half of such taxable year, or
       ``(C) the spouse of the taxpayer, if the spouse is 
     physically or mentally incapable of caring for himself or 
     herself and who has the same principal place of abode as the 
     taxpayer for more than one-half of such taxable year.''.
       (c) Conforming Amendment.--Paragraph (1) of section 21(e) 
     of the Internal Revenue Code of 1986 is amended to read as 
     follows:
       ``(1) Place of abode.--An individual shall not be treated 
     as having the same principal place of abode of the taxpayer 
     if at any time during the taxable year of the taxpayer the 
     relationship between the individual and the taxpayer is in 
     violation of local law.''.

     SEC. 204. MODIFICATIONS OF CHILD TAX CREDIT.

       (a) In General.--Paragraph (1) of section 24(c) of the 
     Internal Revenue Code of 1986 is amended to read as follows:
       ``(1) In general.--The term `qualifying child' means a 
     qualifying child of the taxpayer (as defined in section 
     152(c)) who has not attained age 17.''.
       (b) Conforming Amendment.--Section 24(c)(2) of the Internal 
     Revenue Code of 1986 is amended by striking ``the first 
     sentence of section 152(b)(3)'' and inserting ``subparagraph 
     (A) of section 152(b)(3)''.

     SEC. 205. MODIFICATIONS OF EARNED INCOME CREDIT.

       (a) Qualifying Child.--Paragraph (3) of section 32(c) of 
     the Internal Revenue Code of 1986 is amended to read as 
     follows:
       ``(3) Qualifying child.--
       ``(A) In general.--The term `qualifying child' means a 
     qualifying child of the taxpayer (as defined in section 
     152(c), determined without regard to paragraph (1)(D) thereof 
     and section 152(e)).
       ``(B) Married individual.--The term `qualifying child' 
     shall not include an individual who is married as of the 
     close of the taxpayer's taxable year unless the taxpayer is 
     entitled to a deduction under section 151 for such taxable 
     year with respect to such individual (or would be so entitled 
     but for section 152(e)).
       ``(C) Place of abode.--For purposes of subparagraph (A), 
     the requirements of section 152(c)(1)(B) shall be met only if 
     the principal place of abode is in the United States.
       ``(D) Identification requirements.--
       ``(i) In general.--A qualifying child shall not be taken 
     into account under subsection (b) unless the taxpayer 
     includes the name, age, and TIN of the qualifying child on 
     the return of tax for the taxable year.
       ``(ii) Other methods.--The Secretary may prescribe other 
     methods for providing the information described in clause 
     (i).''.
       (b) Conforming Amendments.--
       (1) Section 32(c)(1) of the Internal Revenue Code of 1986 
     is amended by striking subparagraph (C) and by redesignating 
     subparagraphs (D), (E), (F), and (G) as subparagraphs (C), 
     (D), (E), and (F), respectively.
       (2) Section 32(c)(4) of such Code is amended by striking 
     ``(3)(E)'' and inserting ``(3)(C)''.
       (3) Section 32(m) of such Code is amended by striking 
     ``subsections (c)(1)(F)'' and inserting ``subsections 
     (c)(1)(E)''.

     SEC. 206. MODIFICATIONS OF DEDUCTION FOR PERSONAL EXEMPTION 
                   FOR DEPENDENTS.

       Subsection (c) of section 151 of the Internal Revenue Code 
     of 1986 is amended to read as follows:
       ``(c) Additional Exemption for Dependents.--An exemption of 
     the exemption amount for each individual who is a dependent 
     (as defined in section 152) of the taxpayer for the taxable 
     year.''.

     SEC. 207. TECHNICAL AND CONFORMING AMENDMENTS.

       (1) Section 2(a)(1)(B)(i) of such Code is amended by 
     inserting ``, determined without regard to subsections 
     (b)(1), (b)(2), and (d)(1)(B) thereof'' after ``section 
     152''.
       (2) Section 21(e)(5) of the Internal Revenue Code of 1986 
     is amended--
       (A) by striking ``paragraph (2) or (4) of'' in subparagraph 
     (A), and
       (B) by striking ``within the meaning of section 152(e)(1)'' 
     and inserting ``as defined in section 152(e)(3)(A)''.
       (3) Section 21(e)(6)(B) of such Code is amended by striking 
     ``section 151(c)(3)'' and inserting ``section 152(f)(1)''.
       (4) Section 25B(c)(2)(B) of such Code is amended by 
     striking ``151(c)(4)'' and inserting ``152(f)(2)''.
       (5)(A) Subparagraphs (A) and (B) of section 51(i)(1) of 
     such Code are each amended by striking ``paragraphs (1) 
     through (8) of section 152(a)'' both places it appears and 
     inserting ``subparagraphs (A) through (G) of section 
     152(d)(2)''.
       (B) Section 51(i)(1)(C) of such Code is amended by striking 
     ``152(a)(9)'' and inserting ``152(d)(2)(H)''.
       (6) Section 72(t)(2)(D)(i)(III) of such Code is amended by 
     inserting ``, determined without regard to subsections 
     (b)(1), (b)(2), and (d)(1)(B) thereof'' after ``section 
     152''.
       (7) Section 72(t)(7)(A)(iii) of such Code is amended by 
     striking ``151(c)(3)'' and inserting ``152(f)(1)''.
       (8) Section 42(i)(3)(D)(ii)(I) of such Code is amended by 
     inserting ``, determined without regard to subsections 
     (b)(1), (b)(2), and (d)(1)(B) thereof'' after ``section 
     152''.
       (9) Subsections (b) and (c)(1) of section 105 of such Code 
     are amended by inserting ``, determined without regard to 
     subsections (b)(1), (b)(2), and (d)(1)(B) thereof'' after 
     ``section 152''.
       (10) Section 120(d)(4) of such Code is amended by inserting 
     ``(determined without regard to subsections (b)(1), (b)(2), 
     and (d)(1)(B) thereof)'' after ``section 152''.
       (11) Section 125(e)(1)(D) of such Code is amended by 
     inserting ``, determined without regard to subsections 
     (b)(1), (b)(2), and (d)(1)(B) thereof'' after ``section 
     152''.
       (12) Section 129(c)(2) of such Code is amended by striking 
     ``151(c)(3)'' and inserting ``152(f)(1)''.
       (13) The first sentence of section 132(h)(2)(B) of such 
     Code is amended by striking ``151(c)(3)'' and inserting 
     ``152(f)(1)''.
       (14) Section 153 of such Code is amended by striking 
     paragraph (1) and by redesignating paragraphs (2), (3), and 
     (4) as paragraphs (1), (2), and (3), respectively.
       (15) Section 170(g)(1) of such Code is amended by inserting 
     ``(determined without regard to subsections (b)(1), (b)(2), 
     and (d)(1)(B) thereof)'' after ``section 152''.
       (16) Section 170(g)(3) of such Code is amended by striking 
     ``paragraphs (1) through (8) of section 152(a)'' and 
     inserting ``subparagraphs (A) through (G) of section 
     152(d)(2)''.
       (17) Section 213(a) of such Code is amended by inserting 
     ``, determined without regard to subsections (b)(1), (b)(2), 
     and (d)(1)(B) thereof'' after ``section 152''.
       (18) The second sentence of section 213(d)(11) of such Code 
     is amended by striking ``paragraphs (1) through (8) of 
     section 152(a)'' and inserting ``subparagraphs (A) through 
     (G) of section 152(d)(2)''.
       (19) Section 220(d)(2)(A) of such Code is amended by 
     inserting ``, determined without regard to subsections 
     (b)(1), (b)(2), and (d)(1)(B) thereof'' after ``section 
     152''.
       (20) Section 221(d)(4) of such Code is amended by inserting 
     ``(determined without regard to subsections (b)(1), (b)(2), 
     and (d)(1)(B) thereof)'' after ``section 152''.
       (21) Section 529(e)(2)(B) of such Code is amended by 
     striking ``paragraphs (1) through (8) of section 152(a)'' and 
     inserting ``subparagraphs (A) through (G) of section 
     152(d)(2)''.
       (22) Section 2032A(c)(7)(D) of such Code is amended by 
     striking ``section 151(c)(4)'' and inserting ``section 
     152(f)(2)''.
       (23) Section 2057(d)(2)(B) of such Code is amended by 
     inserting ``, determined without regard to subsections 
     (b)(1), (b)(2), and (d)(1)(B) thereof'' after ``section 
     152''.
       (24) Section 7701(a)(17) of such Code is amended by 
     striking ``152(b)(4), 682,'' and inserting ``682''.
       (25) Section 7702B(f)(2)(C)(iii) of such Code is amended by 
     striking ``paragraphs (1) through (8) of section 152(a)'' and 
     inserting ``subparagraphs (A) through (G) of section 
     152(d)(2)''.
       (26) Section 7703(b)(1) of such Code is amended--
       (A) by striking ``151(c)(3)'' and inserting ``152(f)(1)'', 
     and
       (B) by striking ``paragraph (2) or (4) of''.

     SEC. 208. EFFECTIVE DATE.

       The amendments made by this title shall apply to taxable 
     years beginning after December 31, 2003.

                      TITLE III--CUSTOMS USER FEES

     SEC. 301. EXTENSION OF CUSTOMS USER FEES.

       Section 13031(j)(3) of the Consolidated Omnibus Budget 
     Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is amended 
     by striking ``September 30, 2003'' and inserting ``March 31, 
     2010''.
       Amend the title so as to read: ``An Act to amend the 
     Internal Revenue Code of 1986 to accelerate the increase in 
     the refundability of the child tax credit, and for other 
     purposes.''.
  The PRESIDING OFFICER. Under the previous order, the amendment to the 
title is agreed to.
  The title was amended so as to read:

       A bill to amend the Internal Revenue Code of 1986 to 
     accelerate the increase in the refundability of the child tax 
     credit, and for other purposes.

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