The House passed the Marriage Penalty-Child Tax Credit portion of Bush's tax plan. However, they made one major modification which was to allow parents who pay no income taxes to qualify for the child tax credit up to the point they pay social security taxes. It also applied some of the marriage penalty rhetoric to decreasing the burden on poor families who marry and lose EITC benefits I don't know how this interacts with the overall EITC and whether it resembles at all some of the proposals Max has made for merging the EITC into the child tax credit, but it is a significant improvement over Bush's proposals.
It's actually the one part of the tax plan that, while not ideal, has some positive aspects. It will take a large number of families off the tax roles completely, thereby further weakening future support for "tax cut" politics. As a number of conservatives have noted, we are reaching the point where a majority of families will be paying no income taxes at all. This is actually quite positive, since any appeals to cut all taxes "X percent" will have no even propaganda appeal to such families, since X% of zero is still zero.
Strategically, there is a good case to let this part of the tax plan pass as the most favorable to promoting progressive politics in the future. It is actually better in some ways than the $300 rebate plan, which might help poorer families more in the short-term, but would not shift the political terrain against future tax cut politics quite as much.
-- Nathan Newman
March 30, 2001 House Passes 2 More Pieces of Bush's Tax Cut By DAVID E. ROSENBAUM ASHINGTON, March 29 - Forging ahead despite uncertain prospects in the Senate, the House of Representatives today approved two more elements of President Bush's tax-cut plan and took the first tentative step toward eventual repeal of the estate tax.
By a vote of 282 to 144, the House passed a bill that would lower income taxes for married couples and double the tax credit available to families with children. The measure is somewhat more favorable than the Mr. Bush's proposal to low-income families and less beneficial to the wealthy.
The bill, which would give all couples who pay income taxes a break, has these four parts:
. It would raise the standard deduction, starting next year, to make it twice that for single people. This year, the standard deduction for couples is $7,600 and that for single people is $4,500.
. For couples who itemize deductions, the bill would gradually raise the amount of income covered by the 15 percent tax bracket so that it is twice that for single people.
. For low-income working couples, the bill would raise the amount of income on which they would be entitled to the earned-income tax credit.
. It would adjust the alternative minimum tax, a special tax on those with unusually large deductions, to ensure that married couples would not be treated less favorably than individuals.
The House's plan would be more generous than Mr. Bush's proposal for low-income couples and those couples with only one wage earner.
The other part of the bill the House approved would double the tax credit for families with children to $1,000 a child, from $500; it would also make $100 of that increase retroactive and applicable to 2001 income taxes.
Workers with one or two children who do not owe enough in income taxes to be entitled to the full credit would be allowed a rebate up to the amount they paid in Social Security and Medicare taxes. Currently, only taxpayers with three or more children are entitled to that refund.
Families with incomes up to $130,000 are now entitled to the child tax credit, and the bill retains that income limit. Mr. Bush proposed raising it to $200,000 a family and did not suggest expanding the refund.