(We don’t quite know how this one turned out yet, but given the lower cost in the bill I’d guess the Senate provision stuck. Read here for why that’s such a bad idea. – promoted by David Dayen)
Nancy Berlin is the Director of the California Partnership
With thousands of Californians losing their jobs monthly, families need help bridging the ever widening gap between their incomes and their monthly expenses. The families I work with do essential work–they take care of children, they work in hospitals, and they take care of the elderly. They benefit our community greatly–but many of them haven’t been able to take advantage of the Child Tax Credit due to the minimum income threshold of $8,500. Senators Boxer and Feinstein have an opportunity to change this by using their influence with Congressional leadership and the White House to push for the House version of the Child Tax Credit provision in the Economic Recovery and Reinvestment Act.
Now, it isn’t every day that Congress has the opportunity to enact policy solutions that are likely to feed two birds with one hand. The Child Tax Credit provision in the House version of the Economic Recovery and Reinvestment Act, however, is the type of policy that could do just that. The Child Tax Credit is both vitally important to the growing number of children whose families are suffering during the current recession and a highly effective tool for stimulating the economy. Increasing the number of families who receive the credit and the amount of credit they receive should be a high priority as the House and Senate reconcile their economic recovery packages in Conference Committee.
As the CTC is currently structured a family’s earnings need to exceed $8,500 in order to qualify for the credit. The credit is 15 percent of the amount exceeding $8,500. So, for example, if the family’s earnings are $2000 higher, or $10,500, they would receive $300. If their earnings are below $8,500, they receive nothing. Under the house plan the earnings threshold would be eliminated for the next two years so that workers with lower incomes would be eligible – regardless of earnings – and would at least receive a partial credit for their earnings. Families with two children who earn the full-time minimum wage of $14,500 a year could receive a $1,000 credit for each child or a total of $2,000. The Senate economic recovery plan, which lowers the earnings needed by just $400 to $8,100, would result in that same family receiving just $960.
The difference between House and Senate provisions is quite stark when looked at in terms of impact on Children and families in California. According to the Center on Budget and Policy Priorities (pdf) waiving the $8,500 income threshold would provide the credit to as many as 1.8 million children in the state. Given our current budget deficit in California, and the cuts in social services it is likely to cause, a more accessible child tax credit could not come at a more appropriate time.
In addition to the positive impact the House CTC provision would have on California’s families, increasing eligibility for the Child Tax Credit is also one of the best things we can do to give the economy a quick boost. The reason is simple. Lower-income families are currently in dire need of basic goods and services like food, transportation and energy. By putting money into their pockets, we are effectively pumping money directly into the broader economy.
I’m calling on Senators Feinstein and Boxer to use whatever influence they have to fight for a stronger Child Tax Credit provision in the final economic recovery package. California’s families, as well as struggling children and families nationwide, deserve a CTC that will put money back into the economy by assisting those who need it most. I hope you’ll join me in this effort to improve the Child Tax Credit, for the sake of the nearly 2 million children who will be impacted the most by the nature of the provision.