Parents who need increased child credit most get left behind by Bush tax plan

One of the more politically popular facets to the latest round of tax cuts signed into law by Bush is the expanded child credit.

According to the new law, most families will see the child tax credit grow from $600 to $1,000. (It’s worth noting that the twisted nature of most of the tax law’s provisions — loaded with deceptive “sunset clauses” — will mean that the credit is scheduled to drop to $700 next year and fall to $500 by the year 2013. But I digress…)

However, as the New York Times reported yesterday, a last-minute change by congressional Republicans will prevent millions of low-income families from benefiting from the change in the tax law.

“Because of the formula for calculating the credit, most families with incomes from $10,500 to $26,625 will not benefit” from the expanded child tax credit, the Times reported.

As a practical matter, this will mean nearly 12 million children in low-income families that will be left behind by the new tax cut while wealthy families receive a windfall. Making matters slightly worse, the new law benefits investors who receive dividends and those in the upper income brackets. Low-income families are already exempt from paying income taxes, so as a result, these millions of families will get literally nothing out of the new plan.

This is truly unbelievable. The people who need help the least get the most money; the people who need the most help get nothing.

How much would it have cost to extend the tax credit for these 12 million children? $3.5 billion. And while that may sound like an enormous amount of money, it’s only one percent of the cost of the overall tax cut. In other words, congressional Republicans and the White House could have pared back the tax cut for the wealthy by just one percent and allowed millions of low-income families to enjoy an expanded tax credit. They chose not to.

An article in today’s Washington Post follows up on the Times piece and looks at who benefits, and who doesn’t, from the new tax policies.

“Multinational high-technology companies, rural health care and millions of poor children were among the losers in the negotiations last week as Republican lawmakers completed their $350 billion tax cut plan by the White House’s Memorial Day deadline,” the Post reported. “Mammoth sport-utility vehicles, well-heeled corporate executives and Bermuda-based corporations were among the winners.”

In response to the Democrats’ outrage about the slanted nature of the latest Bush tax cut, White House spokesman Ari Fleischer said defensively, “This administration treats taxpayers right.”

Yeah, Ari, as long as the taxpayers are millionaires contributing to the Bush-Cheney re-election committee.

Remember those speeches Bush was giving earlier this month to tout the tax cut? Bush said, “Oh, you’ll hear the talk about how this plan only helps the rich people. That’s just typical Washington, D.C. political rhetoric, is what that is. That’s just empty rhetoric.”

He was lying.