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Blog: Child Tax Credit Must Support Low-Income Working Families

Jul 23, 2014 | By Marge Clark, BVM

On Thursday, July 24, the House of Representatives will vote on a bill significantly revising the Child Tax Credit (CTC).

The bill would permanently extend the credit higher up the income scale making it available to households with much higher six-digit incomes while the benefit to low-income families (expiring in 2017) will not be renewed. More affluent households would benefit more than the millions of low-income working families!

NETWORK stands in strong opposition to this bill (H.R. 4935, the Child Tax Credit Improvement Act of 2014). The CTC, as revised in 2009, should be made permanent, with the indexing suggested in the House bill. But, the less just aspects need to be eliminated.

To date, the CTC has been a major contributor to keeping millions of families out of poverty, a great example of tax policy benefiting the 100%. One portion the credit in particular, a refundable credit for working families with limited earnings, has helped lift families from poverty. Currently, the Child Tax Credit is worth up to $1000 per eligible child, the amount varies by income, with a phase out beginning at income over $110,000 in the filing year. A household must have a reportable income of at least $3000 in order to be eligible. For low incomes, over the $3000, the credit is refundable.

Here's an example of what this bill would do:

A married couple with two children making $160,000 would receive an additional tax cut of $2200. But, a single mother with two children, receiving minimum wage, earns just $14,500 a year and would lose $1,725 as her CTC would disappear altogether.

Earlier today, this letter was sent up to the House expressing our views on the bill:

Dear Speaker Boehner:

Tomorrow, the House will take up consideration of H.R. 4935, the Child Tax Credit Improvement Act of 2014 (CTC), which modifies the current credit and makes it permanent. Catholic teaching has long promoted support for families and we believe tax policy can be used to promote the common good. We are deeply concerned, however, about two fatal flaws in the bill and therefore cannot support the bill in its current form. We respectfully ask that you oppose this bill and seek to improve it by adding provisions that permanently protect all families, particularly those families living in poverty.

First, the bill fails to make permanent a key CTC improvement for working families earning as little as $3,000 per year, slated to expire at the end of 2017, while permanently extending it to higher income families. Extending a permanent CTC that helps wealthy families, while failing to make permanent the credit for those living in poverty is unjust. This failure would have a devastating impact on more than 2 million families that are already struggling to makes ends meet and who need the credit the most.

Second, the bill was recently modified to deny the credit to parents who file with an IRS-issued Individual Tax Identification Number (ITIN) rather than a Social Security number thus harming children from some of the poorest working families in America. Legal residents and undocumented workers who file their taxes using ITINs pay billions of dollars in taxes -- payroll, Social Security and Medicare – and yet are not eligible for benefits. Cutting them off from the CTC will hurt up to 5.5 million children, 4.5 million of whom are U.S. citizens. These taxpaying families -- like all families -- deserve support and an opportunity to succeed.

A permanent child tax credit must address the needs of all families, but particularly the ones who earn the least. As you vote tomorrow, please vote no for the Child Tax Credit Improvement Act as proposed. We look forward to working with you to develop a credit that promotes the common good for 100% of America’s families.