The House voted Thursday to prevent parents from losing part of their child tax credits next year, one of three popular tax cuts that Congress wants to preserve before the November election.
The bill, passed 271-139, cuts taxes $228 billion over a decade and expands the credit’s coverage by more than doubling to $250,000 the amount a couple could earn and still claim the full benefit.
“This is about children. It’s about families,” said Rep. Nancy Johnson, R-Conn. “It’s tough to raise a family today.”
Democrats roundly criticized the GOP for offering bigger tax cuts to wealthier families and cutting taxes while war costs escalate and budget deficits deepen.
“I have two children, and I’m going to vote against this bill because I don’t want to send them the bill for the money that we’re borrowing to pay for our increased spending and tax cut after tax cut after tax cut,” said Rep. Robert Andrews, D-N.J.
The bill is the latest in a series showcasing President Bush’s tax cuts before the election and calling for making them permanent. The House also passed bills that would preserve tax cuts for married couples and broaden the bottom tax bracket.
The Senate plans to wrap all three tax cuts into one bill and pass them later this year. The Republican budget, passed in the House, envisions a final bill that stops short of making the tax cuts permanent and instead calls for a one-year extension.
Credit was set to begin dropping next year
The measure approved by the House would preserve the $1,000-per-child tax credit for parents of children under 17. The credit is scheduled to drop to $700 next year and not return to $1,000 until 2010.
Some lower-income families would immediately reap bigger tax refunds from the credit under a change that lets low-wage workers earning more than $10,750 claim 15 percent of the credit as a refund, an increase from 10 percent currently refundable.
Soldiers on active duty could also claim bigger credits under an adjustment that would count tax-free combat pay toward the calculation.
The House voted 226-187 to reject a Democratic version of the bill that made preservation of the $1,000 child tax credit hinge on a balanced budget after 2010. It also would have let families claim the credit when they earn $10,000 or more, making full-time minimum wage workers eligible. Democrats wanted to cover the cost by imposing a 2.75 percent surcharge on individuals earning more than $500,000 and couples earning more than $1 million.
Democrats criticize higher income limit
Democrats denounced the GOP bill for making the full credit available to more higher-income families, increasing the amount a family can earn from $110,000 to $250,000 before starting to lose the credit.
“I don’t know many in American who would consider a married couple making $250,000 a year as a middle-class family,” said Rep. Ruben Hinojosa, D-Texas.
Republicans said it was Democrats who described families earning a quarter-million dollars as “middle income” during debate this month over the alternative minimum tax, a levy imposed on the wealthiest tax dodgers that reaches further into upper and middle classes each year.
Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities, said the tit-for-tat reflected an “extraordinarily political” atmosphere.
He also noted that increasing the income threshold makes members of Congress with children eligible for the credit. Members in the House and Senate earn $158,100.
“It’s hard to make the argument that families above $150,000 have so much trouble meeting the basic costs of providing for their children that they need a government subsidy,” Greenstein said.