With a successful Senate vote earlier today, Congress has now approved a broad tax and budget deal that includes crucial provisions for millions of Americans who struggle to get by on low wages. For months, it was uncertain whether a deal negotiated between the two chambers of Congress and President Barack Obama would preserve improvements to the federal Earned Income Tax Credit (EITC) and Child Tax Credit (CTC).
These improvements make the credits work better for 111,000 of Minnesota’s working families, including about 244,000 children, and will become permanent once the bill is signed by President Obama. Unfortunately, Congress missed an important opportunity to make new gains with the EITC by improving it for households without dependent children.
The EITC and CTC are two of our nation’s most effective tools to help families working at low wages make ends meet, which is why we led an effort in Minnesota urging Congress to make them a priority. During the administrations of presidents Obama and George W. Bush, these credits were improved in very important ways. For example, an improvement to the CTC makes that credit available to workers earning between $3,000 and $14,600. However, those improvements were scheduled to expire. If that had happened, 16 million Americans — nearly half of them children — would have fallen below or further below the federal poverty line. To put that in real terms, a single, working mother of two earning $14,500 a year would have seen her income decrease by $1,725.
The bill that makes the improvements permanent passed the House of Representatives with a vote of 318-109 and the Senate with a vote of 65-33. The elected representatives who voted for the bill in Minnesota’s Congressional delegation were Senators Al Franken and Amy Klobuchar, and Representatives Tom Emmer, John Kline, Rick Nolan, Erik Paulsen, Collin Peterson and Tim Walz.
This bill also presented an opportunity to bring the strong, pro-work impact of the EITC to households without dependent children. Households without dependent children are the only group that is actually taxed deeper into poverty by the federal tax code. A stronger EITC would be a big step towards ending that problem. President Obama and Republican Speaker of the House Paul Ryan have proposed very similar approaches on this issue. Unfortunately, this provision was not included in the year-ending budget legislation. It was a big missed opportunity to make the tax code more fair for millions of people, including young people who are just starting out.