ALEXANDRIA, VA – An effort by legislators to separate provisions changing the alternative minimum tax (AMT) from larger, more comprehensive tax reform legislation may create hardship for children and families expected to benefit from a reform to the current Child Tax Credit. Today First Focus, a bipartisan children’s advocacy organization, urged Senate leadership to ensure low-income families are not ignored by including reforms to the Child Tax Credit in any AMT reform proposal.
“This is likely the last hope for an improvement to the Child Tax Credit in 2008,” said First Focus President Bruce Lesley. “Should Congress choose to leave the credit by the wayside when moving ahead with an AMT reform bill, nearly 13 million low-income children will not have the opportunity to take advantage of this important tax assistance. Congress should be pushing for these common sense changes to the Child Tax Credit, which will help children and families overcome the barriers of poverty.”
In a letter to Finance Committee Chairman Max Baucus (M-MT), First Focus urged the inclusion of reforms to the Child Tax Credit in any AMT reform proposal.
“A reformed Child Tax Credit is an important first step on the path towards a tax code that makes the needs of America’s children a top priority. We urge you to ensure that this vital provision is included in any short-term tax reform legislation, and to use it as a foundation for further tax reforms that benefit America’s children and youth. We understand that addressing the ever-widening reach of the Alternative Minimum Tax is an important and pressing task, but we urge you to also address the ever-shrinking scope of the Child Tax Credit,” the letter said.
Currently, the child tax credit is a refundable tax credit that allows families to receive a refund of 15 percent of their 2008 income that exceeds $12,050. The proposed legislation would lower the minimum floor to $8,500 for 2008. Lowering this floor would extend eligibility for the credit to 2.9 million additional children, while increasing refunds for approximately 10 million additional children.
-the text of the letter is below-
December 6, 2007
The Honorable Max Baucus
United States Senate
Washington, DC 20510
Dear Senator Baucus:
I am writing on behalf of First Focus, a bipartisan advocacy organization committed to making children and their families a priority in federal policy and budget decisions, to urge you to consider the needs of children as you take up the important issue of temporary tax reform. The federal tax system impacts every part of American life, and the lives of families and their children are no exception. This being the case, when discussion turns to the issue of reforming the tax code, children should occupy a central place in that debate. We hope that, included in your efforts to protect millions of middle class Americans from the Alternative Minimum Tax, there will be a parallel effort to extend tax relief to low-income families. Specifically, we urge you include reforms to the Child Tax Credit in any AMT reform proposal.
Currently the Child Tax Credit is structured in such a way as to prevent many low-income working families from benefiting in full, and some families are actually excluded from the credit all together. This is because the income floor, only above which families can begin claiming a refund, is set too high and, since it is indexed to inflation, it continues to grow each year. Indeed, every year more and more families are dropped out of eligibility for the credit. Lowering that income floor modestly, by about $2,500, and preventing the floor from continually rising will result in much needed tax relief for families of nearly 13 million children. In fact, enacted these proposed reforms will mean that 3 million more children will become eligible to receive a Child Credit refund and additionally, the families of about 10 million more children will be able to claim a larger refund than that which they can currently claim.
Working families with children need all the help they can get. The federal tax system should be designed to help these families provide for their children, work hard, and stay out of poverty. A reformed Child Tax Credit is an important first step on the path towards a tax code that makes the needs of America’s children a top priority. We urge you to ensure that this vital provision is included in any short-term tax reform legislation, and to use it as a foundation for further tax reforms that benefit America’s children and youth. We understand that addressing the ever-widening reach of the Alternative Minimum Tax is an important and pressing task, but we urge you to also address the ever-shrinking scope of the Child Tax Credit.
We appreciate your commitment to a fairer, more equitable tax system, and to ensuring a bright future for our children. Here at First Focus, we applaud you for your efforts on behalf of America’s working families and we look forward to working with you on this, and other proposals to improve the well-being of our nation’s children.
Sincerely,
Bruce Lesley
President