Montana’s advocates for low- and moderate-income families weren’t exactly doing handsprings earlier this year when President Bush unveiled a tax proposal that offered huge breaks for the wealthiest 2 percent of Americans, while providing little relief for those who need it the most.
But when Bush signed the final tax plan into law last Thursday, Montana advocates took some pleasure in knowing that their lobbying efforts had paid off, especially on Sen. Max Baucus (D-Mont.). They credit Baucus for answering their plea to include a refundable child tax credit that helps thousands of Montana families at the lower end of the economic scale.
“It’s not everything we wanted, but it’s a step in the right direction,” says Kate Kahan of the low-income advocacy group Working for Equality and Economic Liberation, who lobbied Baucus and his staff on the Senate Finance Committee for the measure which, for the first time, allows millions of low-income Americans to claim a portion of the child tax credit.
The Bush administration initially proposed simply doubling the existing tax credit, from $500 to $1,000 per child. But families in the $10,000 to $20,000 income range often do not earn enough to qualify. Still, they pay a sizeable portion of their income in other taxes, such as payroll taxes and property taxes.
Under this new plan, families earning more than $10,000 can claim 15 percent of their earnings above $10,000, up to $2,000. For example, a family with two children earning $11,000 will get back $150. Under other child credit proposals , those family would not otherwise have qualified.
According to numbers provided by the Senate Finance Committee, at least 68,000 more children in Montana will be covered under this proposal than under the administration’s plan, benefiting some 34,000 taxpayers statewide.
Nationally, the families of 16 million children who would have seen no tax relief under the Bush proposal will get at least some relief under this provision. According to Kahan, this new plan puts some $8 billion back into the hands of low-income families.
Baucus’ bill, a bipartisan effort hammered out with then-chairman of the Senate Finance Committee, Charles Grassley (R-Iowa) also includes a $4,000 tax deduction for college tuition, and boosts contribution limits for savings and retirement like 401(k) plans.