WASHINGTON – Lawmakers on both sides of the aisle are trying to gain the upper hand in the contentious class warfare debate that has raged following the omission of low-income parents from a child tax credit included in the $350 billion tax cut package signed into law last month.
On Tuesday, House Democrats stopped business on the floor to protest the Republican leadership's "refusal to reverse their decision to exclude millions of low-income children and military families from the recent tax cut bill."
Democrats had wanted Republicans to bring up a recently written bill to provide child tax credits to those families under a unanimous consent rule that permits streamlining the legislative process, but the request was denied.
"The cruelest thing of all is when they still found themselves $3 [billion] or $4 billion short and instead of shaving a little bit off where the bulk of the money would go ... they saw fit not only to go after low-income people but the children of low-income people," House Ways and Means Committee Ranking Democrat Rep. Charles Rangel of New York said in describing negotiations last month on the tax cut package.
In July, the Treasury Department (search) is sending out $400 per child refunds to families who qualify for the expanded benefit under the $350 billion tax cut package.
As a result of late-hour negotiations, the tax cut enacted last month did not include the increased child tax credit from $600 to $1,000 for families that make between $10,500 and $27,000, the Center on Budget and Policy Priorities (search) determined. Many of the workers in that income range don't make enough money to qualify for the entire credit.
Members of the Democratic Caucus, led by House Whip Steny Hoyer of Maryland, announced Tuesday that they would immediately introduce legislation to give the low-income workers the tax credit.
Hoyer said that the new bill could have been avoided if Republicans had agreed in negotiations to reduce the highest marginal tax rate to 35.3 percent rather than 35 percent.
"To fit a 10-pound tax cut into a five-pound bag, they made the decision to preserve the dividend tax cut that most economists say won't stimulate the economy and drop the provision to provide a child tax credit for the poorest Americans — some of whom might not pay income taxes but who pay plenty of other taxes," Hoyer said, adding that those Americans would be most likely to spend the money to stimulate the cut.
Republican Sen. Charles Grassley of Iowa, the Senate's top tax writer and a key member of the negotiating team, said Monday he wants to close the gap that was left when lawmakers negotiated the package to stay within the limits demanded by moderate Republicans and Democrats in the Senate.
Grassley, who has said his bill probably won't be debated until 2004, would provide the credit to low-income families and make permanent the child credit, now set to expire in 2005.
The bill would cost $65 billion through 2010, he said Monday.
Two other senators have also announced legislation making the child tax credit available to low-income families. Republican Olympia Snowe of Maine and Democrat Blanche Lincoln of Arkansas, both of whom said they voted against the $350 billion tax cut because it omitted the child benefits for low-income taxpayers, propose paying for the credits by shutting down some corporate tax shelters.
The Associated Press contributed to this report.