STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - October 05, 2005)
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Mr. KERRY. Mr. President, today I am introducing the Strengthen the Earned Income Tax Credit Act of 2005. Since 1975, the EITC has been an innovative tax credit which helps low-income working families. President Reagan referred to the EITC as ``the best antipoverty, the best pro-family, the best job creation measure to come out of Congress.'' According to the Center on Budget and Policy Priorities, the EITC lifts more children out of poverty than any other government program.
It is time for us to reexamine the EITC and determine where we can strengthen it. Census data released in August and the events of Hurricane Katrina reiterated the fact that there is a group of Americans that are not benefiting from the economic recovery. The Census data shows the number of people who work, but live in poverty increased by 563,000. Four million more people were poor in 2004 than in 2001, when the economy hit bottom. The poverty rate in 2004 remains higher than the rate in 2001, the year of the recession.
Hurricane Katrina affected many individuals who were already faced with difficult economic situations. Mississippi, Louisiana, and Alabama are the first, second, and eighth poorest States in the Nation. The income of the typical household in these three States is well below the national average. In the hardest hit counties, 18.6 percent of the population is poor and the national average is 12.4 percent.
Time after time, the Republican controlled Congress has passed tax cuts which are skewed towards those with the most. The Urban Institute-Brookings Institution Tax Policy Center reports that households with incomes of more than $1 million a year--the richest two-tenths of the population--receive tax cuts of an average of $103,000 a year. These individuals do not have to worry about how they will have to pay for a roof over their heads or enough gas to fill the tank. We should not be focused on tax cuts which help those who do not have to worry about living pay check to pay check.
We need to help the low-income workers who struggle day after day trying to make ends meet. They have been left behind in the economic policies of the last 4 years. We need to begin a discussion on how to help those that have been left behind. The Earned Income Tax Credit is the perfect place to start.
The Strengthen the Earned Income Tax Credit Act of 2005 strengthens the EITC by making the following four changes: Reduce marriage penalty; increase the credit for families with three or more children; slow down the phase-out for individuals with no children; and permanently extend the provision which allows members of the armed forces to include combat pay as income for EITC computations. By making these changes, more individuals and families would benefit from the EITC.
First, the legislation increases marriage penalty relief and makes it permanent. In the way that the EITC is currently structured, many single individuals that marry find themselves faced with a reduction in their EITC once they are married. The tax code should not penalize individuals who marry.
Second, the legislation increases the credit for families with three or more children. This proposal would make the credit more generous for families with 3 or more children. Increasing the credit rate results in an increase in the phase-out range. More families would be able to benefit from the EITC. The poverty level for an adult living with three children is $19,233. Under current law, an adult living with three children and eligible for the maximum EITC with income equivalent to the phase-out income level would still have income below the poverty level. This provision would lift this family above the poverty level. Some 36 percent of all children live in families with at least three children and more than half of poor children live in such families.
Third, the legislation would slow down the phase-out rate for individuals without children. It would result in more individuals without children eligible for the credit. For 2005, an individual with earnings above $11,750 would not be eligible for the EITC. Under the proposal, an individual with earnings above $16,950 would not be eligible for the EITC. The EITC for individuals with no children only offsets a portion of federal taxes. Giving more individuals the EITC would help provide an incentive to work.
Fourth, the Working Families Tax Relief Act of 2004 included a provision which would treat combat pay as earned income for purposes of computing the child credit. This provision expires at the end of the year. This legislation makes this provision permanent. There is no reason why a member of the armed services should lose their EITC when they are mobilized and serving their country.
This legislation will help those who most need our help. It will put more money in their pay check. We need to invest in our families and help individuals who want to make a living by working. We are all aware of our fiscal situation and we should legislate in a responsible manner. It is a time for shared sacrifice. We do not need to extend tax cuts or allow tax cuts to go forward that only benefit those earning over $200,000. We cannot keep adding to the deficit
Thank you for your consideration.