Tax Credit EXCLUDES Thousands in Maine

MaineToday.Com ^ | Friday, May 30, 2003 | BART JANSEN

[fight_truth_decay]

WASHINGTON — Thousands of Maine families with low or moderate incomes won't qualify for the $400 child tax credit that more-affluent families will receive under the tax cut signed by President Bush. Republican Sen. Olympia Snowe and congressional Democrats criticized Republican congressional leaders Thursday for refusing to make low-wage earners eligible for the increased child tax credit.

In the tax-cut compromise struck by negotiators in a House-Senate conference committee, the increased credit was made available only to families that earned enough to pay taxes. In Maine, that means the parents of an estimated 40,000 children won't benefit from the credit.

"I am dismayed that conferees eliminated the refundable portion of the child tax credit from the jobs and growth package," said Snowe, a member of the Senate Finance Committee who opposed the final version of the tax cut. "This ill-founded decision creates a two-tier system under the child tax credit, penalizing low-income working families who need the help most."

As part of the 2001 tax cut, Snowe insisted that a $600 child tax credit be refundable to families earning at least $10,000. The requirement upset conservative lawmakers because it meant that minimum-wage families got a refund even though they paid no taxes.

This year's tax cut increased the child tax credit from $600 to $1,000 for each of the first two children in a family, but restricted eligibility. Also, the minimum income to claim the credit was raised by $500, to $10,500.

The result is that only families earning enough to pay taxes, or about $26,000, will benefit from the change. Higher-income families are expected to receive checks for $400 per child (maximum of two) in July and August.

Retaining eligibility for lower-income families would have added $3.5 billion to the $350 billion cut over 10 years.

The Center on Budget and Policy Priorities, a nonpartisan group that studies federal legislation, estimated that the change would prevent 12 million children nationwide from qualifying for a credit.

Snowe and Reps. Tom Allen and Mike Michaud, both D-Maine, voted against the $350 billion tax cut, arguing it would expand the deficit without stimulating the economy.

Sen. Susan Collins, R-Maine, voted in favor of the tax cut because it provided $20 billion in state aid, including an estimated $116 million for Maine.

Ari Fleischer, the White House spokesman, defended the tax cut Thursday, noting that it reduced tax rates on stock dividends and capital gains, and speeded up reductions in income tax rates. He argued that 3 million low-wage workers would no longer have to pay taxes at all because of the changes.

"This certainly does deliver tax relief to the people who pay income taxes," Fleischer said.

But Senate Minority Leader Tom Daschle, D-S.D., wrote Bush a letter Thursday urging the president to support legislation that would fix the problem for workers who earn too little to pay taxes.

"I hope the president will agree to reduce the tax breaks for the very wealthy in order to restore this tax relief for hard-working taxpayers who need it most," he said.

Staff researcher Julia McCue contributed to this article

[BlackbirdSST]

We, the people, who PAY taxes are NOT quite that STOOPID!

I wouldn't go that far! Who elected them? Blackbird.

[Grampa Dave]

You are in the same position that my son and his wife are in.

You work hard and acquire the skills to make good money and pay more taxes than anyone else. Then because you worked hard and have skills to make good money, no refund for you! So much for the BS that this is a tax cut for the rich.

[LoneGOPinCT]

Thus the reason you're a CPA and I'm not (and a good thing!). 8^)

[Madame Dufarge]

The poll at 4:49 PM EST:

NO: 80.46%

YES: 19.54%

563 votes.

Probably all FReepers.

[fight_truth_decay]

Probably all FReepers.

I think... 240 when I posted the article.