While much of the media has focused on the debate over extending Bush-era tax cuts for the rich, some other tax relief for the less-than-wealthy have hardly gotten a second glance.
The Child Tax Credit and Earned Income Tax Credit, provide critical support for struggling households, like the single mom trying to raise four kids on minimum wage. The Recovery Act expanded the EITC and CTC for many households. But Senate Minority Leader Mitch McConnell wants to keep redistributing wealth from bottom to top by simultaneously extending high-income tax cuts and abandoning critical tax relief for the poor. According to the National Women’s Law Center:
Under the McConnell bill, millions of struggling families would lose $11.6 billion in tax credits next year.
- 12.9 million taxpayers would lose nearly $8.4 billion from excluding the CTC improvement, and 98 percent of this loss would be to families with low to moderate incomes (in the lowest two-fifths of income nationwide).
- 11.7 million taxpayers would lose nearly $3.2 billion from excluding the EITC improvements, and 91 percent of this loss would be to families with low to moderate incomes (in the lowest two-fifths of income nationwide).
- Over 30 percent of single mothers would get nothing.
In contrast, under the McConnell bill, households with incomes exceeding $1 million would receive an average tax break of nearly $104,000 — not including the added benefits for heirs of multimillion dollar estates from the estate tax cut included in the McConnell bill.
The NWLC sketches out how this might be felt by a typical struggling family:
Sarah, a single mom with three kids, makes $14,450 per year working full time in a child care center. Under the McConnell bill, less than $2,000 of Sarah’s income would be counted towards the [Child Tax Credit] and she would receive only $240 from this credit - $1,478 less than the $1,718 credit she would receive under the Obama plan. If Sarah earns only $12,500 because her hours are reduced, under the McConnell bill she would get nothing from the CTC.
In sum: the proposed program would excise some of the few progressive aspects from the tax structure, and instead help the rich barricade themselves in their wealth and let more women and children slip toward destitution.
In light of the recent sharp rise in women’s poverty—to about one quarter of Black and Latina women, respectively, and 39 percent of single moms, such a proposal seems hard to justify.
Unless you’re Grover Norquist, president of Americans for Tax Reform. He warned the Globe that the tax hike for the super-wealthy would be “a body blow to the small-business community.” It doesn’t sound like he has the same qualms about kicking the poor when they’re down.