Lincoln, Snowe Call on Congress to Expand Child Tax Credit

Lincoln, Snowe Call on Congress to Expand Child Tax Credit

U.S. Senators Blanche Lincoln (D-Ark.) and Olympia Snowe (R-Maine) today reintroduced legislation to ensure that more of America's low-income, hard-working families receive the benefit of the child tax credit. Currently, almost one-third of children come from families that do not qualify for the credit because family earnings are too low, even though parents are working full-time, every week of the year.

Lincoln's and Snowe's measure, the Working Family Child Assistance Act, would correct inequities in the current law which have prevented thousands of working families from receiving the refundable child tax credit due to inflation.

"We have made great strides in ensuring that the Child Tax Credit is a useful tool for America's working families; however it isn't working for everyone," Lincoln said. "It is wrong to provide some hard-working families this relief, while leaving others behind. We must address this inequity and ensure that our tax code works for all Americans, especially those working parents forced to get by on the minimum wage."

"Congress must confront how to best provide tax relief to hard-working American families. And we can do that by expanding the availability of the child tax credit. Unfortunately, low-income families earning less than $11,750 are shut out of the child tax credit completely," said Snowe. "That is why Senator Lincoln and I have introduced legislation that will enable more hard-working, low-income families to receive the refundable child credit this year. The Maine Department of Revenue estimates that 16,700 families in Maine alone would benefit from our proposal. Parents deserve their per-child tax credit, and now is the time for the Congress to act."

Low-income working families must currently meet an income threshold in order to be eligible for the refundable child tax credit. However, when the child tax credit refundability law was written in 2003, it was indexed for inflation and has increased each year. Because the credit threshold is tied to inflation, many low-income working parents do not meet the necessary income level to qualify for the relief.

Lincoln and Snowe, both members of the Senate Finance Committee, worked to create the refundable child tax credit in 2001 and co-authored legislation in 2003 to expand the refundable portion of the credit. When the child tax credit was signed into law in 2003, the income threshold was set at $10,500. Indexed for inflation, it has thus increased each year ($11,750 for 2007) placing the threshold too high for many working families to meet. In 2006, a single parent working a 40-hour week every week of the year earning the federal minimum wage made $10,712, below the qualifying level.

Lincoln's and Snowe's legislation would de-index the income threshold and set the income threshold taxpayers must reach to receive the refundable portion of the child tax credit to $10,000. The Senators said their legislation would enable all working parents, including those making the minimum wage, to qualify for the credit.

http://lincoln.senate.gov/press_show.cfm?id=267475