Legislation Introduced by Congresswoman DeLauro

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Summary

The Child Tax Credit Fairness Act, H.R. 4030

In 2001 Congress provided a $1,000 refundable tax credit per child to working families who earned at least $10,000 per year. But unfortunately, the minimum amount that families must earn is indexed for inflation – meaning that fewer working low-income families are eligible for this tax credit each year. As a result, more than 600,000 working families will not receive any child tax credit this year – and this number will continue to rise each year unless Congress corrects this problem.

In 2005, only families who earned over $11,000 per year could receive this refund. This year, only families who earn over $11,300 will be eligible for a refund from the child tax credit.

This means that many families are being shut out of a tax credit that they deserve simply because they did not receive a pay raise.

Our tax code must not penalize families who work hard and play by the rules. But for a single father earning the minimum wage of $5.15 per hour and works a 40 hour week for all 52 weeks of the year, the tax code does just that. He earns no refund from the child tax credit because he earns only $10,700 annually. Unfortunately, it will become increasingly difficult to qualify for a refund of the child tax credit, because the income threshold is indexed to inflation - and thus increases every year - but the minimum wage is not.

With wages stagnant and inflation a very real threat, Congress should be making things easier for working families, not more difficult. To correct this problem, I have introduced legislation that will reduce the minimum income threshold from $11,300 to $10,000 and prevent future indexing of the income threshold. That change will provide a refundable credit of just over $100 for a family with one full-time minimum-wage earner. This measure also will ensure that the credit is available in future years for the increasing number of workers whose incomes remain stagnant. This legislation is identical to a bill introduced by a bipartisan group of Senators led by Sens. Olympia Snowe and Blanche Lincoln.

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