Congress faces a series of critical budget choices in the coming months, and must soon decide which federal income tax provisions set to expire at the end of this year should be renewed and which should end. Expiring provisions include tax cuts enacted in 2001 and 2003 and improvements to the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) that were included in the American Recovery and Reinvestment Act of 2009 (ARRA) to help low- and moderate-income families make ends meet when their paychecks are not enough. A bill passed by the Senate, S. 3412, would renew the 2009 improvements to the CTC and EITC along with the Bush-era tax cuts for 98 percent of Americans (couples with incomes below $250,000, individuals with incomes below $200,000), while largely ending the Bush-era tax cuts on income above those levels.
In contrast, the bill passed by the House, H.R. 8, would renew the Bush-era tax cuts for the richest two percent but end the 2009 improvements to the CTC and EITC – taking $12.6 billion in tax credits away from low- and moderate-income working families next year, while giving households with incomes above $1 million an average tax cut of $160,000.
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