What do you think?

Senate approves extending child credit

By MARY DALRYMPLE
AP TAX WRITER

WASHINGTON -- The Senate voted Thursday to give some low-income families a check worth up to $400 for each of their children, as Republicans buckled under demands from Democrats to make more low-wage workers eligible for an increased child tax credit.

"These are hardworking couples who put in a hard day's work," said Democrat Blanche Lincoln of Arkansas, who pressured Republicans to revisit the tax cut President Bush signed in May. "They're trying desperately to raise a family."

The Senate's overwhelming 94-2 vote in favor of the tax package, which expands the child credit for low-income workers and high-income married couples, underscored the political momentum building behind the issue. The only two senators to oppose the legislation were Republicans James Inhofe and Don Nickles, both of Oklahoma.

The tax package must reach the president's desk by June 23 for low-income families to get checks along with 25 million middle-income households already slated to get an advance refund of the child tax credit, just temporarily increased to $1,000.

"I'd like to see all of these folks included when the round of checks are sent out this summer," said Senate Finance Committee Chairman Charles Grassley, R-Iowa.

But before workers can count on the money, the House must pass the bill. House Republican leaders - cool to sending payments to workers who pay no income taxes - have not said whether they will consider the legislation.

Some Republicans have historically supported refundable tax credits, such as the much larger earned income tax credit, as a way to encourage low-wage workers to stay in the labor force and avoid welfare.

But this year's debate saw Republicans arguing that tax cuts should lift the burden on those who pay income taxes. They said the 6.5 million families that make between $10,500 and roughly $27,000, who will now be eligible for a bigger child tax credit, already get their income taxes and much of their payroll taxes refunded through the earned income tax credit.

"This notion that we are not taking care of the poor working families of this country is completely false," said House Majority Leader Tom DeLay, R-Texas.

Backed by a strong push from community activists, Democrats pointed to the tax cut enacted last month as concrete proof that Republicans favor the wealthy over the poor.

"This administration is waging war on poor children," said Sen. Hillary Rodham Clinton, D-N.Y. "The reality is that they are steadily and surely trying to turn the clock back on all of the programs and supports that working families and their children need and deserve."

The bill allows low-income families to get a refund worth 15 percent of their income in excess of $10,500. A full-time worker making minimum wage earns $10,300 a year.

Soldiers in combat zones who are exempt from income taxes will also be able to claim the credit.

In addition to helping low-wage workers, the bill would also increase the amount married couples can earn before the credit starts to decrease, a priority of Republicans. In 2008 and 2009, married couples making up to $115,000 can claim the full credit. In 2010, couples who make up to $150,000 can claim the full credit. At higher incomes, married couples could claim a partial credit.

All families will see the credit drop from $1,000 to $700 in 2006 unless Congress acts to make the increase permanent.

The legislation also reduces the five definitions of a "child" used for different tax deductions and credits to a single definition. The bill's $10 billion cost will be offset by an extension of customs fees.

I'm in a middle income bracket, and I can barely afford to keep my kid in clothes. I'd be all for it.

I am all for it.  I make more than the 27,000 (but not much more) that they say is low income, but I am barely making it paycheck to paycheck, lots of macaroni and cheese eaten in this house.  This year my daughter starts school and I need to figure out how to come up with money for school clothes.  I would love to see this pass.  

I have one question, is there a table or something out there so I could see if I qualify?  

I'm not quite sure how I feel about it yet. My family would benefit from the tax credit.  As everyone has said, raising a kid is expensive, anything to help out is welcome.  The extra money will help, I just don't trust the guys in Washington to look out for anyone's best interest but their own.

While I personnaly will not benefit from it, I say its about time something was done for the lower income bracket.

Let's hope you make a better go of introducing it than here in Britain.

I know many people who had a benefit stopped because they were going to receive a working family tax credit except that the new payments haven't yet started..  Nor can they get through to the help lines because the staff have been overwhelmed with the number of claims.

Perhaps they advertised too well

I am not saying that low income families don't need more money (who doesn't  ::)); However the press needs to stop calling this a "Tax Cut" because it is not (How can you get a tax cut when you pay no taxes?). It is a welfare plan.  the government is taking money from people who earned it, and giving it to people who have not earned it.  

Well, hubby and I don't qualify for any of these, but I think additional credits are needed.  Sending it in the form of a check, though, I'm not so sure about.  If it is truly a "tax credit", it should be applied to the income taxes filed.  

I'm all for putting money back into the families that need it most. Here's what I would do if I were in charge. All this "tax credit" would be rerouted into our state agencies that deal with wage garnishments and child support. More money=more manpower=more competent and faster results when dealing with the deadbeat moms and dads that made a lof of these families low income in the first place. That's what I would do if I were in charge....