Congress Takes Steps To Help Millions of Poor Children!

by Reggie Oldak, Senior Counsel
National Women’s Law Center

As we’ve explained previously, middle- and many upper-income families receive a $1,000 Child Tax Credit (CTC) for each child under age 17. Some poor working families who don’t owe federal income taxes benefit from the CTC, but current law requires that they have minimum earnings of $12,050 to receive at least a partial credit as a refund. If their earnings are lower, they are too poor to qualify!  Moreover, every year the minimum earnings threshold is adjusted upward for inflation. Inflation adjustments in the tax code usually help taxpayers, but this one has the opposite effect. The eligibility threshold started at $10,000 in 2001; the annual increases have excluded low-wage-earners every year whose wages failed to keep up with inflation. 

Earlier this year, the House passed legislation lowering the threshold to $8,500 for 2008, but Senate efforts have previously focused on a threshold of $10,000. 

Last Friday, Senate Finance Committee Chairman Max Baucus (D-Mont.) introduced legislation that would lower the minimum earnings threshold to $8,500 for 2008.  If this bill is enacted, families of more than 13 million children could become newly eligible to receive the credit or receive larger credit. For a single mother working 40 hours a week, 50 weeks a year for the minimum wage, this change would mean the difference between a Child Tax Credit refund of $32 under current law and $564 under the Baucus and House-passed bills.   

We thank Senator Baucus for his efforts, and we encourage fast action on his Jobs, Energy, Families and Disaster Relief Act of 2008 (S. 3335). If enacted, it could mean real help for poor families when they file their taxes next year. But – there’s always a “but”, isn’t there? – we have to remind you that these proposals are for 2008 only. Whatever happens, we’ll be advocating for critically needed tax reforms to help low-income women and families again next year.