Conference Report On H.R. 1308, Working Families Tax Relief Act Of 2004
Mr. Speaker, I will enter into the Record at this point an article from the Boston Globe entitled ``Sticking it to working families,'' that shows how this Congress is raising taxes on 4 million low-income families which support 9 million…
Mr. Speaker, I will enter into the Record at this point an article from the Boston Globe entitled ``Sticking it to working families,'' that shows how this Congress is raising taxes on 4 million low-income families which support 9 million children.
[From the Boston Globe, Sept. 21, 2004]
Sticking it to Working Families
(By Thomas Oliphant)
Washington.--Only in George Bush's privileged America could
the following outrage occur:
Despite the president's supposed theological objection to
tax increases, that is exactly what about 4 million families
with roughly 9 million children are about to experience, with
Bush's cynical support.
The outrage is actually worse, because the shiv is about to
be stuck in these hand-working families under the guise of an
effort to help them.
Congress is about to pass a catch-all measure allegedly
designed to deal with several
problems affecting middle-income and lower-income working
families arising from the tax cuts of recent years. The
problems are a graphic illustration of how shoddy legislation
written by people who mostly focus on big-shot lobbyists can
cause ordinary Americans to plummet through the cracks. At
issue is the child tax credit--which first appeared in tax
law in the late 1990s in a budget deal between the Clinton
administration and the Republican Congress. This provision
permits a deduction from income taxes due for each child
under the age of 17 in a household. In 2001, the value of the
credit was set to gradually increase to $1,000 per child, but
in the package of additional tax cuts enacted two years
later, the phase-in was eliminated and the full, $1,000
figure was made immediately effective.
The problem arises because parts of the law governing the
child tax credit are ``indexed'' to remove the effects of
inflation and parts are not. The value of the credit itself,
for example, is not indexed; neither are the income amounts
above which the value of the credit begins to phase out
($75,000 for a head of household, $110,000 for a married
couple).
On the other hand, the income thresholds above which a
working person can claim a ``refundable'' child tax credit--a
check from the government if income tax liability is so low
to begin with that the person would not get his full credit--
are indexed for inflation. The original legislation permitted
a refundable child tax credit for families worth up to 10
percent of their earnings above $10,000. That indexed
earnings amount is now $10,750.
And there's the rub. An analysis by the Urban Institute and
the University of Wisconsin offers the example of a married
couple with two children who work at the federal minimum wage
of a puny $5.15 an hour. Three years ago, their income of
$20,6000 would have produced a child tax credit refund of
$1,060. With a higher threshold two years later, the credit's
value drops 5 percent to $1,010.
But that's just the tip of the iceberg. As ordinary
Americans know too well, incomes downscale in the United
States have been worse than stagnant in this decade. Not only
has the minimum wage not budged in seven years, but family
incomes above that have also suffered severely since 2000,
and the suffering has been proportionately greater the lower
you go on the income scale.
Moreover, this decline in earnings (even before inflation
in cases like workers with less than a high school education
or single parents) has been accompanied by large increases in
the cost of necessities--including everything from gasoline
to health insurance for those low-income workers lucky enough
to have any. In the expert analysis--Leonard Burman of the
Urban Institute and John Karl Scholz of the University of
Wisconsin--a single parent who got a $109 credit in 2001
would have received nothing last year even though her
earnings fell.
Looking ahead to next year and beyond, it is helpful that
the refund rate will rise to 15 from 10 percent, but it will
largely ignore the working families with the lowest incomes.
As the analysis sums up: ``The higher phase-in rate will do
nothing to abate the underlying problem that arises from
stagnant income growth at the bottom of the earnings
distribution. Low-income households with earnings that grow
slower than inflation will see their child tax credit erode
in real terms every year, and at a rate that is even faster
than their decline in real earnings.''
Bush and his Republican Congress buddies could fix all this
substantially, by simply restoring the original $10,000
threshold. The cost to the government would have been $4.3
billion over five years.
The fact that they did nothing is eloquent testimony to the
status of working families in today's political culture. The
next time Bush trumpets his opposition to tax increases, John
Kerry should say something about the 4 million families Bush
prefers not to count.
Mr. Speaker, low- and middle-income Americans need help. They need help paying for college, health care, and things that every family needs. When I heard the House is going to do this, I thought, oh, boy, I better get my rubber stamp and get out and help the President do it. It sounded like a good idea. The middle class has been pummeled in the last years.
Between 1979 and the year 2000, the income of the top 5 percent in this country has increased 200 percent. During the same period, the income of the middle class grew by 12 percent, and low-income families have seen their income actually drop. Roughly during the same period, the top 5 percent saw their income tax rates sliced in half and enjoyed a precipitous decline in taxation of their investment income. Meanwhile, Social Security and Medicare taxes, a burden carried primarily by the low- and middle-class taxpayers, grew 82 percent faster than their incomes did.
Mr. Speaker, when President Bush came in, income inequality got worse. The Bush tax cuts increased the after-tax income of the top 5 percent by 8 percent, while our middle class watched their incomes decline during the same period.
We have to do something to help the middle class; but after reading this bill, I learned that my colleagues are asking us to play charades today.
This bill gives the average middle-class household $169 of tax relief, but guess what, it gives the top 5 percent $2,000 worth of tax cuts. So for every dollar that my colleagues provide in tax relief to the middle income, they provide $10 additional for the top 5 percent of income earners, which happens to include ourselves. Where is the fairness? Where are our priorities if we vote for this thing?
New data from the U.S. Labor Department indicates that since Bush took office at least 670,000 manufacturing jobs have been lost to foreign trade. The CRS, the Congressional Research Service, recently estimated that 860,000 service sector jobs were shifted offshore in 2003 and 2004.
Mr. Bush went to Harvard Law School or went to business school, I guess; but I do not think it had much effect on him. He has not asked the Congress to do anything to address our competitiveness problem. He just asked us to pass tax cuts for the richest among us. Mr. Speaker, he may have gone to grad school or business school, but it really has done nothing for him.
The bill before us is going to add $146 billion to our budget deficit. Where are we going to get that from? We are going to borrow it. We are going to go to the Chinese and say, hey, we have got some notes we want to sell you; would you like to buy some of our notes? How about you, Japanese; would you like to buy some of our notes? That is where this tax cut is coming from. The gentleman says it is coming from our money; it is not. It is coming out of the Japanese if they buy the bonds.
Mr. Speaker, here we are again with one of these election-year bills. I can imagine that there are people out there watching and listening to this debate and trying to make head or tail of what is going on here today, and I intend to vote ``no.'' I was asked by one of the press, why are you going to vote ``no''? And I think that is a really good thing to discuss, because it would certainly be easy to vote ``yes.'' Everybody wants to give tax breaks.
Who in the world in an election year, 40 days before election, would not want to give away all of this money and do all of these kinds of things? But I am a child psychiatrist and one of the things you learn in raising children is that sometimes you have to say, no, we cannot do that. We cannot buy that. We cannot have that. And this Republican majority in the House and Senate really does not seem to be able to ever say no. They do not believe that you cannot spend on a credit card forever.
A credit card, I have got them in my pocket like everybody else does; you have to pay it back some time. Now, the United States right now, and the reason I do not want to borrow another $149 billion is because this is borrowed money. This is not money that anybody has paid in taxes. This is money that we are borrowing from the Chinese and the Japanese and the Saudis. We go out there selling these Treasury notes. Now, when that lapses, who controls the United States? Us or those to whom we are in debt?
If they decide to pull that money out, we go down like a rock. And you think the Chinese are really on our side? Do you think they are really friendly? You think they would not do that to us economically? We are putting ourselves in danger. The Republican majority, if they were trying to destroy this economy, could not have done a better job than they have done in the last 2 years. We thought 350 or whatever it was last year was bad. Now we have got $420 billion. That is over $700 billion that we have gone in debt, we have borrowed from the Chinese, from the Saudis, from the Europeans.
We just go and say, Please, we need money. We are the richest country in the world. We have got the biggest army and all that kind of stuff, but we need money. Please give us money so we can keep our economy going. That is not the America that I want. I think we have to have some fiscal discipline in this House, and it has to start in things like this.