The final tax bill signed by President Bush in May was skewed largely toward those who need help least, but it contained an important touch of fairness for children and families. The Child Tax Credit in the new tax cut legislation allows families with earnings of more than $10,000 to receive a refund check even if they do not owe federal income taxes.
This means that nearly 17 million children in low-income working families will get more than they would have under Bushs original proposal. While child advocates did not get everything we sought in a refundable tax credit for all children in need, the version passed is a major step forward that will help lift 500,000 children out of poverty.
The Child Tax Credit will increase gradually from $500 to $1,000 per child. A bipartisan group of senators led by Republican Olympia Snowe and Democrat Blanche Lambert Lincoln fought to include a provision allowing many low-income families to share in the benefits of the tax cut. For example, a family with children and $12,000 in earnings will receive a refund check of $200. A family with earnings of $22,000 and two children will receive $600 per child, the maximum value of the credit in 2001. Starting in 2005, families with children may claim a credit of 15 percent of earnings over $10,000. The next step is making the tax credit fully refundable, which is a top priority of the Act to Leave No Child Behind, the comprehensive piece of legislation addressing key childrens needs introduced in Congress May 23 by Sen. Chris Dodd and Rep. George Miller.