Mr. President, this week Senator Durbin and I are introducing the Working Families Tax Relief Act with a majority of my Democratic colleagues on the Senate Finance Committee.
For a number of years, one area of bipartisan agreement in Washington has been on the need for comprehensive tax reform. Tax reform can clear the Code of wasteful carve-outs and special interest loopholes.
Senator Enzi was part of a bipartisan meeting that the Finance Committee is wont to do, sitting around a table talking about these issues, just last week.
We understand that comprehensive tax reform can place American companies on an even footing with foreign competitors. It can reduce the deficit. It can provide a shot in the arm to economic competitiveness and growth. On that there is agreement.
What comprehensive reform should not do--and there is general agreement on this also--is undermine the earned-income tax credit and the child tax credit. These credits are the single most effective incentive to increase low-income parents participating in the workforce and reward work and promote family formation--all goals which we, I believe, all seek. That is why support for these programs in the past has been broad-based and bipartisan.
President Reagan and former Representative Jack Kemp--the former running mate of Senator Dole in a Presidential election--were champions of the modern earned-income tax credit. When it was expanded in 1986, President Reagan said it is ``the best antipoverty, the best pro-family, the best job creation measure to come out of Congress.'' He was right.
In Ohio some 1 million households received the EITC--the earned-income tax credit--and 665,000 households received the CTC--the child tax credit--on average in the 3 years of 2009, 2010, and 2011.
That is why this week Senator Durbin and I, along with most of our Democratic colleagues, are introducing the Working Families Tax Relief Act. Our bill would make permanent the 2009 levels for the earned-income tax credit and the child tax credit. It would index the child tax credit for inflation. It would allow workers without children to access the full earned-income tax credit. It would reduce the full earned-income tax credit access age to 21. It would simplify the filing process to reduce fraud because there is some acknowledged fraud in this program, as
there is throughout the tax system. And I have pledged to many of my colleagues on both sides of the aisle, as this bill moves forward, to work to reduce that fraud.
The Recovery Act of 4 years ago expanded access and refundability for both the EITC and CTC. It was meant to respond to the great recession but also to ensure the country's finest antipoverty programs keep up with the times. Making these credits permanent at the current level is critical to fighting poverty.
In 2011, the EITC and CTC lifted 10 million people, including 5 million children, out of poverty. The EITC has helped nearly half a million single mothers enter the workforce. These credits do not just reward work, they provide lifelong benefits to children. We know from studies that it improves health outcomes, it increases earning potential for children in low-income families, because those families pulled out of poverty can give advantages to those children that pay off later in life they could not give to those children in those families if their incomes were below the poverty line.
Expectant mothers who receive the EITC are more likely to receive prenatal care. These are not opinions; they are fact. Newborns are more likely to experience birth indicators, such as low weight and premature birth. Behind all of these statistics are real people, people whose lives and opportunities are improved because of these credits.
Let me share a story. Michelle Eddy, a Cleveland native, is a single mother who works hard to support her two daughters. One is 9, the younger is 4. This year the Neighborhood Housing Services of Greater Cleveland helped Ms. Eddy prepare her tax return. She was able to use the credits she received from Earned Income Tax Credit and Child Tax Credit to pay for school supplies, uniforms, and daycare for her two daughters.
She has worked in a retail store as a shift manager for 5 years. She recently, though, started a new job as a restaurant server so she can spend evenings and weekends with her daughters. Without EITC, without CTC, she would almost certainly have to work a second job to make ends meet, leaving her children at home without her far too often. The EITC and the CTC are not what make Michele Eddy a good mother, but they enable her to be there with her children when they need her most.
Right now, some 30 percent of children under the age of 3 are in families with too little earnings to qualify for full CTC. Even worse, nearly 13 percent of children under 3 are in families with no earnings, and as such get into CTC or EITC. We know the Child Tax Credit is not indexed for inflation. By the end of the decade another 1 million children will be forced to grow up in poverty.
The CTC needs to be more robust. We need to reform the Tax Code now. I am very hopeful that Senator Baucus in his last year and a half in the Senate, with Ranking Member Hatch and leaders from that committee such as Senator Wyden and Senator Enzi and others, can reform the Tax Code, can put measures in place to prevent fraud.
As we introduce the Working Families Tax Relief Act, I remain hopeful our colleagues across the aisle will work with us to make these credits a part of tax reform.