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Recent Developments on Economic Opportunity Legislation
House Considers Child Tax Credit Bill that Fails to Address Expiring Provisions Benefitting Low-Income Families (Summer 2014)
In June, the House Ways and Means Committee approved H.R. 4935, the Child Tax Credit Improvement Act of 2014, introduced by Representative Lynn Jenkins (R-KS-2). The bill will next be considered on the House floor the week of June 21 This legislation would reduce the marriage penalty by extending the Child Tax Credit to higher-income married couples, and would index the credit amount and the income thresholds to inflation. While RESULTS supports efforts to index the credit, the bill does nothing to make permanent the provision lowering the income threshold for the refundable portion of the credit to $3,000, which allows low-income earners to claim the credit. If Congress does not act, this provision will expire in 2017, and the credit will then only be refundable for incomes over approximately $15,000. Citizens for Tax Justice estimated that nearly 9 million families, including 16.5 million children, benefitted from this provision in 2013, and that approximately 3.7 million families would lose the credit altogether if the provision were to expire. The Center on Budget and Policy Priorities estimated that nearly one million people were lifted above the poverty line due to this expiring provision. Moreover, it is estimated that H.R. 4935 would cost more than maintaining the $3,000 refundability threshold. However, nearly two-thirds of the benefits of the bill would go to workers in the top 40 percent of the income distribution. In contrast, if the income threshold was reduced to $0, over two-thirds of the benefits would go to workers in the bottom 20 percent of the income distribution. Learn more about H.R. 4953 in this analysis by the Tax Policy Center.
TAKE ACTION: Tell your Representatives that any reform to the Child Tax Credit should make permanent provisions that benefit lower-income families who need this assistance the most. Urge them to instead support H.R. 769, the Child Tax Credit Permanency Act of 2013. In addition, RESULTS supports H.R. 2116, House legislation to expand and strengthen the Earned Income Tax Credit (EITC), and S. 836, which protects and expands both the Child Tax Credit and the EITC. You can use or modify our online Action Alert to ask your members of Congress to protect and strengthen tax credits for low-income families.
RESULTS Urges Congress to Support the Financial Security Credit (Spring 2014)
RESULTS U.S. Poverty volunteers are writing letters to and meeting with members of Congress about the importance of asset building in addressing poverty. Specifically, we are urging members of Congress to get behind the Financial Security Credit (FSC), which would help low-income taxpayers build savings during tax season. By making saving easy (people sign up on their tax return when low-income household typically receive large refunds from the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC)), and smart (if the savings balance is maintained for eight months, participants receive 50 cents for every dollar saved up to $500 per year), all the pieces are in place for the FSC to work. In fact, the SaveUSA program has shown that this idea can succeed.
The biggest problem with the FSC right now is not its concept or its ability to succeed, but its obscurity. But for a few lawmakers, most members of Congress know little or nothing about the FSC. That’s why your letters this month are so important. They introduce this innovative concept to lawmakers, which is the first step in building the momentum to be included in tax reform in the next few years. In addition to your letters, you also have another way this month to put this issues front and center with lawmakers: meet with them to discuss the FSC face-to-face in meetings and at public events. This is a great opportunity to ramp up support for the FSC and talk about the broader issue of expanding economic mobility in America.
TAKE ACTION: Take ten minutes to take the March Action. Write letters to your members of Congress about the Financial Security Credit and urge them to talk to tax leaders about including it in any new tax legislation. Also urge your House members co-sponsor H.R.2917, the Financial Security Credit Act of 2013. The March Action has talking points and background information to help you.
In addition, contact schedulers for all your members of Congress THIS WEEK to ask about face-to-face meetings during an upcoming recess. Ask to schedule a sit-down meeting with your member of Congress to talk about expanding economic mobility and the FSC. Also ask the scheduler about any town hall or public events you can attend during the recess. To help you prepare, see our Financial Security Credit Laser Talk and our Economic Mobility Lobby Meeting Request Sheet. Once you have a meeting scheduled or know you’re attending a town hall, please contact Meredith Dodson (firstname.lastname@example.org) for help in getting ready. For more information about the FSC and our 2014 Economic Mobility Campaign, check out our resources from the March U.S. Poverty National Conference Call.
House Bills Provide Economic Opportuniy for Low Income Tax Filers
In the House, there are currently three bills proposed that help surrounding polices that RESULTS tracks. Rep. DeLauro (D-CT-3) introduced the Child Tax Credit Permanency Act of 2013 (H.R.769), which makes the 2009 improvements to the Child Tax Credit Permanent. This bill currently has 166 co-sponsors. Similarly, Rep. Richard Neal (D-MA-1) has introduced a bill, the Earned Income Tax Credit Improvement and Simplification Act of 2013 (H.R.2116), which makes the 2009 improvements to the EITC permanent and expands the credit for single workers without children.
On the asset building side, Rep. Jose Serrano (D-NY-15) introduced the Financial Security Credit Act of 2013 (H.R.2917). This bill would utilize the opportunity of tax time to encourage and reward savings for low income tax filers. At tax time, eligible tax filers would decide to save part or all of their tax refund using one of two methods:
1. Deposit all or part of tax refund into an eligible savings product (e.g. IRAs, 401(k)s, 529 College Savings Plans). And receive a 50 cents per dollar match for their deposits, up to $500
2. Deposit all or part into a traditional savings account but would have to maintain the initial deposit for 8 months before getting the match.
If the tax filer did not have a savings account, they would be able to open one right on their tax return.
Efforts to Enact Tax Reform Stalls (Fall 2013)
At the start of 2013, RESULTS other major campaign (in addition to protecting an strengthening SNAP) was focused on using tax policy to create economic opportunity. In January 2013, Congress passed the “fiscal cliff” deal extending the 2009 improvements to the Earned Income Tax Credit and Child Tax Credit for another five years. Many believed that Congress would seek another deficit reduction “grand bargain” or attempt to enact comprehensive tax reform in 2013, which would put these credits at risk once again. Tax reform also offers an opportunity to enact legislation to support asset-building for low-income families. Many RESULTS volunteers discussed the opportunities to create economic opportunity in tax reform, especially with members of tax-writing committees and their staff. Hundreds of RESULTS advocates and allies met with dozens of senators and over 200 House offices to discuss tax reform priorities, including meetings during our International Conference the week that Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) set a deadline for input about tax reform from their colleagues.
Ultimately, Congress did not move forward on comprehensive tax reform in 2013 and, given the threats to SNAP, we opted to put less emphasis on our economic opportunity campaign in 2013. In the fall of 2013, House leaders abandoned efforts to enact comprehensive tax reform before the 2014 elections. Senate Finance Committee Chairman Max Baucus (D-MT) unveiled a proposal for business tax reform but no further action was taken. Sen. Baucus was appointed Ambassador to China in February 2014.
In the House: Rep. DeLauro (D-CT-3) introduced the Child Tax Credit Permanency Act of 2013 (H.R.769), which makes the 2009 improvements to the Child Tax Credit Permanent. Rep. Richard Neal (D-MA-1) has introduced a bill, the Earned Income Tax Credit Improvement and Simplification Act of 2013 (H.R.2116), which makes the 2009 improvements to the EITC permanent and expands the credit for single workers without children. Rep. Jose Serrano (D-NY-15) introduced the Financial Security Credit Act of 2013 (H.R.2917). This bill would utilize the opportunity of tax time to encourage and reward savings for low income tax filers.
In the Senate: Senator Sherrod Brown (D-OH) introduced the Working Families Tax Relief Act of 2013 (S.836), which would make the 2009 expansions to the EITC and CTC permanent.
Senators Introduce Bill Strengthening EITC and CTC (April 2013)
On April 25, Sens. Sherrod Brown (D-OH) and Richard Durbin (D-IL) introduced S. 836, the Working Families Tax Relief Act of 2013. This bill would strengthen and the EITC and CTC by making the 2009 improvements permanent, expanding the EITC for full-time workers and workers without children, lowering the EITC eligibility age from 25 to 21, and simplifying the EITC rules for certain claimants. When the bill was introduced, it already had 30 original co-sponsors, including Senate Finance Committee Chairman Max Baucus (D-MT). This comes on the heels of a recent hearing in the Senate Finance Committee on April 18 to discuss how tax reform would impact families and children. While the discussion did not get into details about specific proposals, the EITC and CTC did come up with several senators speaking in defense of these important poverty-reduction tools. You can read about some of the options presented on the Senate Finance Committee website.
RESULTS strongly supports S.836 and we thank Sens. Brown, Durbin, and all the co-sponsors for their leadership and working to put working families first.
TAKE ACTION: Urge Congress to protect the EITC and CTC in tax reform using our online tax credit action alert.
Earned Income Tax Credit and Child Tax Credit Protected... For Now (January 2013)
As a part of the "Fiscal Cliff" deal, Congress extended expiring Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) provisions for low-income working families for five years. Given that this was a major focus for RESULTS volunteers, we are pleased that these key provisions are continued but disappointed that they were not made permanent like the other income tax provisions. Specifically, RESULTS worked to extend expansions of the EITC and CTC enacted in 2009. These expansions allowed more low-income families to claim the CTC and increased the EITC for married couples and larger families. For example, a minimum wage family with two children working full-time will see their child tax credit drop $1,500 from about $1,750 this year to only $250. The result is that over 10 million families could have lost benefits and 600,000 children will fall back into poverty. We cannot allow this to happen. In addition, there are broader threats to the EITC and CTC in the context of a deficit reduction package.
Budget battles loom that could lead to deep cuts to EITC and CTC in 2013 and also offer an opportunity to make current EITC/CTC policies permanent. It is critical that members of Congress speak directly to congressional leadership expressing their support not only for legislation making the current improvements to the EITC and CTC permanent, but that lawmakers also expressly include a principle that specifically protects EITC and CTC in any deficit reduction framework. We urge you to continue your follow up with Congressional offices until you get confirmation that your senators and representatives have voiced their support for both of these “asks” directly to key decision-makers. In the long-term, we will continue to educate lawmakers about low-income asset development and the Family Financial Security Credit with the hope of enacting the Family Financial Security Credit as a part of major tax reform in the next 3-5 years.
Congress Goes on Recess After House and Senate Pass Differing Tax Packages (August 2012)
On Wednesday, July 25, the Senate passed on the Middle Class Tax Cuts Act (S.3412) by a vote of 51 to 48. This Act protects and extends tax cuts for all income up to $250,000, including expansions to the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) that were set to expire at the end of this year. Although this does not guarantee that these tax credits will be protected in further legislation, it is important that the Senate took a collective stance towards protecting middle- and low-income families and gaining revenues from the richest Americans. We have more details on our blog about these tax credits and what RESULTS is doing to help!
Meanwhile, on Wednesday, August 1, the House voted to protect the Bush tax cuts for all Americans (including the richest 2 percent of Americans), while raising taxes on the lowest earning Americans by denying to extend expansions to the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) by a vote of 256-171. Congress will not make final decisions on policies to extend or allow certain tax provisions for low-income working families until after the November elections.
TAKE ACTION: call congressional offices about setting up face-to-face meetings and attending town hall events. The August Action has important tips and resources to help you. Contact their local offices to ask about meetings and events; you can find contact information on our Elected Officials page. Only have a few minutes and want to weigh in? Use our online alert to send a quick (personalized is better!) e-mail to your senators and representative to protect tax credits for low-income working families.
House Threatens Immigrant Access to Child Tax Credit (April 2012)
On April 18th, instead of spreading the responsibility for closing the deficit more evenly, the House Ways and Means Committee opted to pass a “reconciliation” bill this week that continues to raise taxes on those least able to pay. The budget passed by the House directs the House Ways and Means Committee to find $53 billion in savings over ten years, $7.8 billion of which the committee hopes to achieve by reviving an anti-immigrant cut to the Child Tax Credit (CTC). The committee has passed legislation this week that would require taxpayers to provide a Social Security Number for their eligible children – an eligibility requirement aimed to exclude poor children, whose working parents use a Taxpayer Identification Number rather than a Social Security Number.
It’s clear that children will bear the brunt of the proposed changes. According to the First Focus, this change could raise taxes on the families of more than 5.5 million children, including 4.5 million U.S. citizens. Denying access to the CTC takes an average of $1,800 out of the pockets of low-income families – who, of families at all income levels, spend the highest percentage of their income directly on their children’s needs.
$aveUSA Helps Low-Income Americans Save $1 Million (February 2012)
Earlier this month, the $aveUSA program announced that it has already helped low-income clients build nearly $1 million is savings. $aveUSA was created in 2011 as an extension of $aveNYC, New York City’s savings program similar to the Saver’s Bonus. Participants who enrolled in the program agreed to save all or part of their tax refund in a designated saving product. After one year, if they still retained their initial deposit of $200, they received a match from the city of the amount they had saved (up to a certain amount). The program was such a success, in 2011 it was expanded to Tulsa, Newark and San Antonio and renamed $aveUSA. Since then, the program has helped create over 1,600 accounts! The success of $aveUSA once again shows that the Saver’s Bonus can work.
TAKE ACTION: Help build support for the Saver’s Bonus by taking our online e-mail action.
Congress Drops Cut to Child Tax Credit in Unemployment Insurance Extension (February 2012)
In December, Congress passed a two-month extension of the payroll tax cut, unemployment benefits, an extension of Temporary Assistance for Needy Families (TANF, the federal welfare program), Medicare payments to doctors, and other provisions. Since then, Congress has been working to extend these provisions through the end of 2012 but Republicans and Democrats were at an impasse as to how to pay for the extensions. One proposed offset was to change the eligibility of the Child Tax Credit (CTC) by requiring CTC claimants have a Social Security number. Right now, taxpayers are only required to have an Individual Tax Identification Number (ITIN) to claim the CTC. This change would have affected 5.5 million children in families earning an average of $21,000 per year, resulting in a loss of $1,800 in income. Fortunately, due in part to phone calls and e-mails to Congress from RESULTS volunteers and other advocates around the country, the CTC proposal was dropped in final negotiations. On February 17, the House (by a vote of 293-132) and the Senate (by a vote of 60-36) passed the extensions; President Obama signed them into law on February 22.
RESULTS Sponsors EITC Policy Briefing for EITC Awareness Day (January 2012)
On January 26, RESULTS co-sponsored an event in Washington, DC with the National Community Tax Coalition (NCTC) to help promote Earned Income Tax Credit (EITC) Awareness Day. Other co-sponsors of the event included the Center on Budget and Policy Priorities, Goodwill Industries, the New America Foundation, and the United Way. The event was a great success with EITC advocates and staff from 26 congressional offices in attendance. Many RESULTS volunteers had contacted their congressional offices urging aides to attend. At the event, speakers talked about the important of the EITC and other low-income tax credits, including the Child Tax Credit (CTC) for low-income working families. The EITC is the largest poverty-reduction program in the U.S.; in 2010, it lifted 5.4 million people out of poverty, including 3 million children. Last year, 29 million households claimed the EITC for a total of $59 billion. However, approximately 6 million eligible households still do not claim the credit.
The event also featured speakers talking about the importance of the EITC in building savings and assets. For example, because an EITC refund can many times represent the largest single income check of the year for recipients, it is an opportune time to promote saving part of their refund for a rainy day. David Rothstein of the New America Foundation and Policy Matters Ohio reported that six years ago, fewer than ten percent of respondents said they would save part of the EITC refund; in the last two years, that number has jumped to 50 percent. This is one reason RESULTS supports the Saver’s Bonus, which would help low-income tax filers start a matched savings account right on their tax return. The Saver’s Bonus can help these families turn a desire to save into actual savings quickly and easily.
Thanks to NCTC for organizing the event. You can read more about the event on their website.
Congressional "Super Committee" Does Not Reach Deal (November 2011)
On November 21, Sen. Patty Murray (D-WA) and Rep. Jeb Hensarling (R-TX-5), the chairs of the “Super Committee” charged with finding at least $1.2 trillion in deficit savings under the Budget Control Act of 2011 (see below), announced that they were unable to make an agreement. Instead, a series of automatic cuts (aka "sequestration") will begin in January 2013 assuming Congress doesn’t find the savings on its own. According to the Congressional Budget Office, non-defense could be reduced by 7.8 percent below current levels in 2013. This means a variety of programs, including Head Start, Early Head Start, Child Care Development Block Grant (CCDBG), the Special Supplemental Food Program for Women, Infants, and Children (WIC), and RESULTS’ many foreign aid priorities will face tremendous pressure; the New America Foundation reminds us that a 7.8 percent reduction in Head Start funding would mean a cut of $585 million from current levels.
So, many are calling this a failure – but we at RESULTS are relieved given the possibility we could have seen draconian cuts to Medicaid, Medicare, Social Security, and Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) in an unbalanced and unfair deal that locked in tax breaks for millionaires and corporations that would widen the wealth gap further. Many key programs, including Medicaid and SNAP, are protected from cuts under sequestration. We will continue to push for smart investments in programs that make a difference in the lives of millions who live in poverty here and around the world to minimize the impact of the automatic cuts, grateful that Congress did not decimate safety net programs for tax giveaways for the “haves” this holiday season.
As we move forward, RESULTS urges Congress to focus efforts on closing the wealth gap, which contributes both to greater poverty and greater budget deficits.
Debt Deal Passes - All Cuts, No Revenue (August 2011)
On August 2, President Obama signed the Budget Control Act of 2011 into law. This law resolves the months-long stalemate over raising the federal debt ceiling that nearly resulted in the first ever U.S. default on its debts. Unfortunately, the bill contains far too few things to celebrate. The bill allows the president to raise the debt ceiling in a series of increments over the next 18 months. In exchange for that authority, domestic discretionary programs (programs that must have their funding renewed each year) will be cut by $1 trillion over the next ten years. One-third of these cuts will come from "security" spending (defense, homeland security, veterans’ affairs, etc.) and two-thirds from non-security spending. Congress must also appoint 12 members of the House and Senate to a new "Super Committee" (6 Republicans, 6 Democrats) that must find at least another $1.2 trillion in savings (through more cuts, more revenue, or both) by Thanksgiving 2011. Congress must vote on the Committee's report by December 23. If the committee fails to find agreement or Congress votes down their proposal, a "trigger" of automatic across-the-board cuts ($1.2 trillion over ten years) will going into effect in January 2013, half from the defense department, half from non-defense programs. Fortunately, if this trigger occurs, many low-income programs like Medicaid, SNAP, child nutrition programs, the EITC, the Child Tax Credit, and others are exempt from these across-the-board cuts. However, these programs could still be cut and/or restructured by the Super Committee. Finally, the House and Senate must vote on a balanced budget amendment before the end of 2011, but passage is not required to raise the debt ceiling. For a more detailed overview and analysis of the Budget Control Act, please see our recent RESULTS blog post.
While low-income programs do get some protection in this law, they remain far too vulnerable. By including no new revenue in the agreement, cutting discretionary spending to the bone (which includes programs like Head Start, Early Head Start, and child care), and putting every program on the chopping block of this Super Committee, Congress and the President have not lived up to their promise to protect America's most vulnerable in deficit reduction.
The Seven Surprising Findings about Asset Development (July 2011)
The Federal Reserve of St. Louis recently published new, exciting information about asset development policies that will better inform our advocacy moving forward. Titled the "Seven Surprising Findings in the Asset Development Field,", the report makes the following observations:
TAKE ACTION: Tell Congress to make low-income asset development a top legislative priority. Urge them to support the Saver's Bonus using our online e-mail action.
Op-ed Highlights Common Sense Approach of the Saver's Bonus (April 2011)
One of the key partners in our asset development work, Rachel Black of the New America Foundation, has published an excellent op-ed about the Saver's Bonus. Her piece, "From Groupon to Saveon: The Smart Way To Boost Savings", demonstrates how the Saver's Bonus uses everyday market principles to incentivize new behavior, i.e. saving. It is a creative and effective piece in showing how the Saver's Bonus just makes sense. The piece was published in the Christian Science Monitor on April 26, 2011.
Sen. Kerry Introduces Bill to Strengthen the EITC (March 2011)
On March 3, Sen. John Kerry (D-MA) introduced the Strengthen the Earned Income Tax Credit (EITC) Act of 2011, S.467. This bill would make permanent the 2009 improvements to the EITC by expanding the credit for married couples and families with 3 or more children; these improvements are currently set to expire in 2012. S.467 would also double the EITC for workers without children from $464 to $929 in 2011 and allow these workers to earn more income before losing the credit; it would also lower the eligibility age for childless workers from 25 to 21. The bill also simplifies some of the filing rules of the EITC to make it easier for families to claim the credit. RESULTS strongly supports this legislation.
House and Senate Pass President’s Tax Cut Compromise (December 2010)
On December 15, the Senate overwhelmingly passed the bill 81-19. The bill was then sent to the House, where is passed 277-148 on December 16. Although House progressives made a symbolic attempt to change the cut to the estate tax in the bill, as expected the bill passed unchanged. President Obama signed it into law on December 17.
RESULTS did not endorse this bill because of the tax cuts for the wealthy included in it. However, we are very pleased that help for working families and the unemployed is included. RESULTS volunteers should be proud of their work ion the EITC and CTC. If not for their tireless work the last few years on these issues and in particular their advocacy on these specific provisions in 2010, they would not have been included. Once again, RESULTS volunteers like you, and key coalition work with our allies, have once again proven that when citizens are persistent and consistent in their advocacy, good things happen. Thank you all for your hard work and commitment to helping working families in 2010. For more details on the compromise, see our 2010 Domestic Campaigns Summary page
President Obama Announces Tax Cut Compromise in Wake of Senate Tax Vote (December 2010)
Follwing the House’s tax cut vote on December 2, the Senate took up two tax bills on December 4, both of which failed. The first, introduced by Sen. Max Baucus (D-MT), would have permanently extended tax cuts for all tax payers under $200,000, including all of the EITC and CTC improvements from ARRA (even the EITC expansion for larger families). President Obama Announces Tax Cut Compromise in Wake of Senate Tax Vote (December 2010)
Following the House’s tax cut vote on December 2, the Senate took up two tax bills on December 4, both of which failed. The first, introduced by Sen. Max Baucus (D-MT), would have permanently extended tax cuts for all tax payers under $200,000, including all of the EITC and CTC improvements from ARRA (even the EITC expansion for larger families). The Baucus bill also reinstated the estate tax under 2009 levels and extended unemployment benefits for another year. Unfortunately, it only received 53 of the 60 votes needed to overcome a Republican filibuster. The second tax bill was introduced by Sen. Charles Schumer (D-NY) and would have raised the cut off for extending tax cuts to $1 million. This bill also included the ARRA provisions for the EITC and CTC. It also fell short 53-37.
During these votes, the White House had been negotiating with Republicans to come up with a compromise deal. On December 6, President Obama announced a “framework” for what that deal would look like. Here are some of the details:
Reactions have been mixed so far. Some Republican leaders have reacted cautiously but positively, while some Democratic members of Congress are threatening to block the deal because of the extension of the tax cuts for the wealthy and deficit concerns. Because of this, RESULTS’ position and actions remain the same — we must keep pushing members of Congress to ensure that the 2009 improvements to the EITC and CTC do not expire on December 31. We must continue the drumbeat until these tax issues are resolved.
House Passes Middle Class Tax Bill with Key Expansions of the Child Tax Credit and Earned Income Tax Credit (December 2010)
On December 2, the House passed the Middle Class Tax Relief Act of 2010 by a vote of 234-188. This bill extended the Bush tax cuts for all taxpayers on their first $200,000 of income ($250,000 for married couples). Because of the hard work of RESULTS activists and many others, the bill includes a permanent extension of the $3,000 income eligibility threshold for the Child Tax Credit and the expansion of the Earned Income Tax Credit for married couples enacted in 2009 under the American Recovery and Reinvestment Act. As you well know, these expansions have helped millions of low-income working Americans make ends meet.
Unfortunately, the tax fight is not over. The bill now goes to the Senate where it faces fierce opposition by Republicans who want all the Bush tax cuts for incomes over $200,000 extended. The Senate is voting on similar legislation on Saturday, December 4. We must urge senators to follow the House’s lead by passing a permanent extension of the 2009 improvements to the EITC and CTC.
New York Times Highlights Importance of Refundable Tax Credits (October 2010)
On October 20, the Earned Income Tax Credit and Child Tax Credit. It rightly points out that as Congress gets set to extend the Bush tax cuts for the middle class, they must also extend recent improvements to tax provisions that help working families. See also an excellent NYT’s piece on income inequality.
Analysis Shows Estate Tax Affects Less Than One Percent of All Estates (October 2010)
On October 20, Citizens for Tax Justice (CTJ) published a new report on the federal estate tax. As you know, the estate tax is a tax on inherited wealth that before this year only applied to couples owing than $7 million in assets. However, opponents of the estate tax have done a masterful job in convincing a majority Americans (around 70 percent) that they will have to pay the tax. The new CTJ report once again shows the absurdity of that belief. Using IRS data, CTJ shows that 0.6 percent of all deaths in the U.S. in 2008 resulted in estate tax liability. In other words, 99.4 percent of all estates in 2008 owed NO estate tax. The report also includes the truth about many estate tax myths, as well as data on the number estates owing the tax in each state. You can read the report at: http://www.ctj.org/pdf/estatetax2010.pdf.
Congress Delays Action on Tax Credits (September/October 2010)
On September 23, Senate leaders decided to delay action on tax legislation until after the November elections. This means any extension of the 2009 improvements to the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) will have to wait until late November or December. Because the House was waiting for the Senate to act first on taxes, it is unlikely the House will act before the elections as well. RESULTS is very disappointed that Senate and House leaders have chosen to make working families wait until the last minute to know the fate of these important tax credits. Without a bill from Democratic leaders, we still do not know if these extensions will even be included in a middle-class tax package. The plan put forth by Senate Minority Leader Mitch McConnell (R-KY) would permanently extend all the 2001 and 2003 tax cuts, even those for the wealthy, but does not extend the ARRA provisions for the EITC and CTC. We need to make sure that when Congress returns in mid-November, they put working families first.
Generate Media Supporting Working Families with the EITC and CTC (August 2010)
September is gearing up to be a pivotal month on tax issues. It is expected that once the House and Senate will return on September 13, one of the first agenda items will be what to do with the expiring Bush tax cuts. Some members are pushing for middle and low-income tax provisions to be extended or made permanent. Others want all the Bush tax cuts, even those for the wealthy, to be extended. A new Pew Center/National Journal poll shows that’s 58 percent of Americans support letting all the Bush tax cuts or those for the wealthy expire, versus 30 percent who favor extending all the Bush tax cuts. In addition, a new report from the Center on Budget and Policy Priorities estimates that extending the tax cuts for the top 2 percent would cost $1 trillion over the first ten years.
While not in the forefront of discussion, our work on extending the 2009 changes to the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) are an important part of this process. If Congress extends these improvements, they will be part of a package to extend the middle-class tax cuts (individuals earning less than $200,000 per year, couples earning less than $250,000 per year). We must remind members of Congress that working families are an important part of our society and our economy, and they suffer just as greatly (if not greater) in times of national economic stress.
The media can be an excellent way to get members of Congress attention, as well as build public support for our goals. This month’s action focuses on generating letters to the editor and op-eds in your local papers about the importance of supporting working families. The messaging for this action is a little different from what we are normally accustomed to. A recent study from Demos has shown that emphasizing the values our society holds dear and making the connection between public structures (government policies) and fulfillment of those values can be very effective. Therefore, in this action, we are focusing on a basic American and human value — support for and by the family. By connecting government policies (the EITC and CTC) with that value, we begin to show others that our public structures to play an important role in supporting families and that we are right to enact those policies.
Creating Champions for the Earned Income Tax Credit and Child Tax Credit (July 2010)
RESULTS volunteers are making a difference by following up from recent meetings and correspondence to support tax policy that empowers low-income working families. On June 22, RESULTS activists from around the nation and world gathered in Washington DC to urge Congress to make tax policy work for low-income families. Those of you who came did an amazing job in your meetings with senators, representatives, and their congressional staff pushing them to protect the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). Our July Action urges Members of Congress (MoCs) to weigh in directly with the representatives and senators who are writing tax legislation. It is not enough for us to simply call and urge them to support our position; we want them to also contact their colleagues on the tax writing committees in support of our position. We want colleague to colleague contact. To make an impact on these issues, we have set the following goals this month:
HOUSE GOAL: At least ten confirmed direct conversations between representatives and House Ways and Means Chairman Sander Levin (D-MI-12) and/or Ranking Member Dave Camp (R-MI-4) and at least twenty letters sent to Reps. Levin and Camp or staff to staff contacts between your MoC’s tax staff and House Ways and Means Committee staff.
SENATE GOAL: At least six confirmed direct conversations between senators and Senate Finance Chairman Max Baucus (D-MT) and/or Ranking Members Charles Grassley (R-IA) and at last fifteen letters sent to Sens. Baucus and Grassley or staff to staff contacts between your MoC’s tax staff and Senate Finance Committee staff.
Follow up from your letters, phone calls and lobby meetings and urge your MoCs to act. Try to meet you’re your representatives and senators during the August recess and ask if they have talked to tax committee leaders. If you cannot get a meeting, politely push their tax aides until you get confirmation that your representative or senator has weighed in his or her support for the Earned Income Tax Credit and Child Tax Credit with key decision-makers. Stress the importance of these tax credits for low-income working families. Available resources include:
Also, be strategic in your work. Use various caucuses in the House and Senate to magnify your influence with tax writing committee members. Generally, members of the Congressional Progressive Caucus, Congressional Black Caucus, and Congressional Hispanic Caucus are supportive of poverty reduction programs like the EITC and CTC. If your member of Congress is on one of these caucuses, urge him/her to ask caucus leadership to weigh in with the tax committee leaders in support of extending the 2009 EITC and CTC provisions. Their support will carry a lot of weight with leadership.
Responsible Estate Tax Act Introduced (June 2010)
On June 23, Sens. Bernie Sanders (I-VT), Tom Harkin (D-IA) and Sheldon Whitehouse (D-RI) introduced S.3533, the Responsible Estate Tax Act (RETA). The bill would reinstate the 2009 estate tax exemption levels ($3.5 million per individual, $7 million per couple), which would exempt 99.75 of all estates from the tax (the estate tax is currently under repeal for one year). Estates worth more than these amounts would be taxes at more progressive rates: between $3.5 million and $10 million, the tax would be 45 percent; between $10 million and $50 million, 50 percent, above $50 million, 55 percent. Also, for estates worth more than $500 million ($1 billion for couples), a 10 percent surcharge would be added. The bill also protects family farmers and closes estate and gift tax loopholes. Linda Sanchez (D-CA-39) introduced a companion version in the House, H.R.5764. While not as progressive as the Sensible Estate Tax Act, the Responsible Estate Tax Act is a more than fair compromise, especially considering that the wealthiest 1 percent in the U.S. saw their income grow by 281 percent between 1979 and 2007. As part of Americans for a Fair Estate Tax, RESULTS has signed onto a letter to Congress in support of S.3533. Also, RESULTS Domestic Outreach Organizer Jos Linn had a letter to the editor published in the Des Moines Register in support of RETA.
Use our online action to urge your members of Congress to support the RETA.
House Ways and Means Chair Discusses 2010 Tax Legislation (April 2010)
On April 19, current House Ways and Means Chairman Sander Levin (D-MI-12) told the National Press Club that he expects Congress will let the Bush tax cuts of 2001 and 2003 for wealthy Americans expire at the end of this year, but extend the cuts for the middle class. He noted that during the last economic expansion from 2001-2007, the wealthiest one percent of Americans received two-thirds of the increased income during, while middle class wages stagnated. He said he also expects the estate tax, which is currently under repeal but returns in 2011, will also be dealt with sometime this year. The House Ways and Means Committee has jurisdiction over tax policy.
Estate Tax Goes into Repeal (January 2010)
On January 1, the federal estate tax officially went into repeal. This means that as that date, no estates in the U.S. owe any estate tax. Unlike the House, the Senate adjourned for the year without passing an extension of the estate tax. The House passed H.R.4154 on December 3, which would make 2009 estate tax levels permanent. Despite Senate inaction in 2009, Sen. Charles Grassley (R-IA), ranking Republican on the Senate Finance Committee, has said he expects the estate tax to be revived, in some form, within the first three months of 2010, but that is no guarantee. Furthermore, it is unknown in what form the renewed tax will take and whether it will be retroactive to January 1. Some members of Congress want to cut the tax even further, while others want a short-term extension of 2009 levels. If nothing happens, the estate tax will return in 2011 at the 2001 levels (55 percent tax rate on assets above $1 million per person).
RESULTS opposes any cuts to the estate tax and supports the Sensible Estate Tax Act (H.R.2023) introduce by Rep. Jim McDermott (D-WA-7). A January 1 Boston Globe editorial called H.R.2023 a promising proposal. Also, a new report from the Center on Budget and Policy Priorities says that, contrary to common belief, allowing the estate tax to expire would leave many family farms and small businesses worse off.
New Paper Argues for Streamlined, More Progressive Low-Income Tax Credits (November 2009)
A new research paper from the Tax Policy Center advocates for the simplification and updating of current tax credits that benefit low-income workers and families. The paper, “Considerations in Efforts to Restructure Refundable Work-Based Credits,” by Steve Holt and Elaine Maag argues that the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC) and the new Make Work Pay Credit (MWP) have done a great deal to help low-income individuals and families supplement their income. Despite this success, the authors argue, because these credits operate separately from each other in the tax code and sometimes have different eligibility rules, improving and updating them would make them more effective and help even more people living in poverty. They focus on several areas under existing law:
Gaps in coverage: Adult workers with no (or grown) children receive disproportionately low benefits compared to workers with dependent children
Higher tax rates: The “phase-out” mechanism currently in place, i.e. how credits decrease as income increases, create very high tax rates for low-income persons at those income levels
Marriage penalties: Two low-income persons face reductions or ineligibility for tax credits if they marry
Complexity: Having three overlapping credits makes it difficult to understand eligibility and benefits of each credit
Holt and Maag propose combining the EITC, CTC and MWP credits into two simplified credits: the Worker Credit and the Child Credit. The Worker Credit would be available for all non-dependent persons between 18 and 65 years old. T