Pryor Negotiates Family-Friendly Tax Provisions in Budget

Pryor Negotiates Family-Friendly Tax Provisions in Budget

Senator Mark Pryor today said he will cast many tough votes over the next few days to ensure the government lives within its means just like families in Arkansas do on a daily basis. As part of this commitment to our future, Pryor said he is proud to put his name on the family tax relief package that incorporates his initiatives to help working class families afford child care and ensure our servicemen and women can continue to collect combat pay as well as other tax benefits they may be entitled.

"We have a responsibility to our children to get government spending in check now. That means making tough decisions about our nation's budget priorities and what we can truly afford to spend," Pryor said. "A very important part of this budget should be making life for working families easier, which is why I have spent a lot of time making sure the child care tax credit and combat pay relief remain in place."

Pryor said he worked closely with a moderate group of Senators, including Finance Committee Chairman Max Baucus, to enhance tax provisions of the budget that would target relief to middle class families. His initiative to make permanent the child care and dependent tax credit is a highlight of the package. Currently, the credit covers child care or elderly expenses capped at $3,000 for one dependant or $6,000 for two or more. Pryor said his provision will maintain these higher levels beyond 2010 when they are expected to revert to $2,400 and $4,800 respectively. He added that the average monthly fees for child care for an infant in Arkansas is $335 a month or $4,020 a year.

"All over the state, I hear from hard-working parents who are concerned that the cost of child care is breaking the bank. Many Arkansans are also juggling the costs of elderly care for their parents," Pryor said. "Keeping the value of this tax credit is simply the right thing to do."

Pryor said the tax package also includes his measure to permanently allow soldiers to treat combat pay - which is not taxed—as income for the purposes of claiming the Earned Income Tax Credit (EITC). In 2004, Pryor passed and the President signed into law a temporary fix to allow soldiers to collect combat pay and take advantage of the EITC and child tax credits. As many as 10,000 lower-income soldiers serving in combat zones were being penalized by as much as $4,500 for officers and $3,200 for enlisted members. The child care tax component was made permanent in 2004, but the EITC portion is set to expire in December 2007.

"A major part of this budget should focus on taking care of our troops and that includes making sure the tax code treats our men and women in uniform fairly," Pryor said. "Congress never intended the tax-free treatment of combat pay to take away money from soldiers serving in war zones. Without question, our country can afford to fix this tax glitch permanently."

Pryor said the tax relief for working families also makes permanent the 10 percent tax bracket, the $1,000 child tax credit, marriage penalty relief (which doubled the standard deduction and phased-out the penalty in the 15 percent bracket), the $10,000 tax credit for adoption expenses and the 2009 estate tax provision that allows a $3.5 million exemption and a 45 percent tax rate. Additionally, Pryor said the proposal also renews and expands the expiring Children's Health Insurance program (CHIP).

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