WASHINGTON -- The House voted Friday to increase the child tax credit, including expanded benefits for upper-middle-class parents.
The proposal would index the $1,000 per child credit to inflation, let people with higher incomes claim the credit and remove a marriage penalty. It is expected to cost the government $115 billion in forgone revenue over a decade, but Republicans said it would help families keep up with the increasing cost of raising children.
It passed on a 237-173 vote, and was supported by the four Republican representatives from Arkansas.
"The child tax credit has failed to keep pace with costs," said Rep. Lynn Jenkins, a Kansas Republican and the bill's sponsor. "This legislation essentially removes the annual hidden tax placed on these families and recognizes that a dollar of income in 1998 and 2004 is not the same as a dollar of income in 2014."
Democrats objected to the plan because it ignores the scheduled 2017 expiration of a child tax credit expansion that benefits the lowest-income households. President Barack Obama's administration issued a veto threat.
"The new Republican rhetoric on poverty is no match for the deeply troubling actions they have repeatedly taken and continue to take with this legislation today," said Rep. Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee. "This bill leads to harm for millions of low- and middle-income families and their kids."
The plan probably won't become law because of Democratic opposition in the Senate and from the White House, and because it's caught in a partisan dispute over tax policy that lawmakers don't expect to resolve until at least 2015, if at all.
Republicans are adding the proposal to a $96.5 billion bill the House passed Thursday that consolidates tax breaks for higher education.
Under current law, parents can claim credits of up to $1,000 per child.
Those benefits start phasing out once parents filing single returns reach adjusted gross income of $75,000 and once married parents filing jointly reach adjusted gross income of $110,000.
Those dollar thresholds and the $1,000 amount aren't pegged to inflation, which means their value has eroded. The bill would link both to inflation and set the start of the phaseout range at $75,000 for single filers and $150,000 for joint filers.
That's a benefit to upper-middle-income married couples who currently get reduced credits or none at all. A wider group of families would benefit from the increased size of the credit.
Democrats focused on the bill's exclusion of any mention of an expiring part of the child credit. Unless Congress acts, at the end of 2017, many low-income families won't be able to qualify for the refundable portion of the tax credit.
About 6 million children would be affected if that law expires, according to the Center on Budget and Policy Priorities, a Washington group that favors policies that benefit low-income families.
House Ways and Means Chairman Dave Camp, R-Mich., called that claim "nonsense" and said it was the Obama administration that failed to make those breaks permanent.
Obama's budget has called repeatedly for making them permanent.
Republicans also included a provision in the bill that would require a Social Security number for children whose parents benefit from the refundable portion of the credit.
That move is designed to cut down on fraud. In 2010, people without authorization to work in the United States collected $4.2 billion worth of credits, according to the Treasury inspector general for tax administration.
That change is expected to yield $24.5 billion in additional revenue, bringing the net budgetary cost of the measure to $90.4 billion over a decade.
"Right now the IRS is providing this refundable child tax credit to those who are here illegally," said Rep. Sam Johnson of Texas, who has supported the measure.
Many Democrats oppose the additional eligibility requirement because they say it would hurt some poor children who are U.S. citizens.
A Section on 07/26/2014