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Friday, June 6, 2003
Low-income families ignored again
By JENNIFER ROMICH
Seattle Post Intelligencer
GUEST COLUMNIST
Last week's last-minute deal that denied the child tax credit
increase to lower-income working families garnered some vocal criticism
("Poor families miss out in tax cut," Monday editorial).
Calls for undoing the damage by extending the credit to families
of some 12 million affected children are met with resistance, led
by House Majority Leader Tom DeLay, R-Texas, who refuses to let
the House consider a revised bill.
As the Bush administration tries to distance itself from the fray,
this incident is being portrayed as an isolated outcome of long
budget negotiations. That's good spin but substantively wrong.
Last week's tax flap is part of a persistent, administration-led
pattern of disregarding, dismissing and creating difficulties for
lower-income working parents.
Backpedaling, White House spokesman Ari Fleischer reported the
president would have liked to have kept the new credit intact for
all families but it wasn't a deal-breaker on its own.
Although it seems hard to justify as "fair" a bill that
left $90 billion in benefits to individuals earning more than $1
million a year while the relatively paltry $3.5 billion child tax
credit provision hit the cutting room floor, it is less patently
unfair to low-income working families than other underheralded
choices the administration makes around tax issues.
The administration's presentation of tax policies does not treat
low-income taxpayers fairly. From the 2000 presidential campaign
on, President Bush has presented tax cuts in terms of what they
will do for the "average" taxpayer. However, this average
Joe or Josette exists only in a math equation that adds in the
huge benefits for a few and hence obscures the small benefits for
the rest.
In tax policy wonk shorthand, it's the Bill Gates-walks-into-a-bar
scenario. The average income in the bar goes up but the average
barfly is left where he started. When Bush touts that the average
tax break under the new law will be more than $2,500, that number
mostly comes from the $18,000 for everyone in the richest 10 percent
(or the $104,000 going to every household in the richest 1 percent).
Low- and moderate-wage workers, who will get an average of less
than $100 per year, are ignored by this rhetoric.
Equally ignorant is the White House claim that lower-wage workers
don't pay taxes. True, lower-wage workers with children end up
having no federal income tax burden, but they pay plenty of taxes.
All workers pay Social Security taxes and the federal income tax
system is one of the few venues for offsetting the sales and property
taxes that often burden lower-income families most heavily. Although
employers write the checks for payroll taxes, economic research
suggests the true burden is passed along to low-wage workers in
the form of decreased wages.
Slimy statistics are one injustice, unequal enforcement is another.
In a less-heralded move, the administration requested $100 million
and 650 new IRS employees to audit low-income taxpayers before
they file their taxes. The proposed "pre-audits" target
taxpayers who receive the Earned Income Tax Credit, a refundable
credit for low-income workers that is most generous to families
with children. This tax credit has been heralded by liberals and
conservatives alike as a highly effective anti-poverty measure
that rewards work.
The administration's proposed regulation changes do not treat
low-income taxpayers fairly. Under the proposed changes, low-income
workers might have to go through a time-consuming search for documentation
such as affidavits from landlords or doctors, or possibly decades-old
marriage and birth certificates before they could complete their
tax forms. The IRS only requires this kind of paper trail from
higher income taxpayers for whom they have good suspicion of wrongdoing
based on evidence. If approved, the new policy would require as
many as 5 million low-income tax filers to provide this documentation
upfront.
According to the National Community Tax Coalition, there are more
effective ways to address issues related to the Earned Income Tax
Credit: simplifying the tax code, regulating paid preparers, supporting
more outreach programs. The IRS continues to waver on whether it
will hold the traditional 30-day comment period on the pre-audit
policy before enacting the punitive strategy.
Commenting on why he doesn't think the currently proposed bill
extending the child tax credit to needy working families is worthy
of House debate, DeLay simply stated, "there are a lot of
other things that are more important."
A strong hint as to what is more important to the administration
comes in the White House-supported Senate proposal to restore the
Child Tax Credit to low-income families. This proposal would spend
the original $3.5 billion on low-income families -- and an additional
$125 billion on extending the benefit to families making more than
$149,999 a year and making some of the cuts permanent.
A pattern of actions make it clear that the administration also
views a tax policy that supports the work effort of America's vulnerable
yet working families as not important at all.
Jennifer Romich
is an assistant professor in the University of Washington School
of Social Work. Romich also serves as a volunteer tax preparer
with the White Center Asset Building Coalition.
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