Senate Bows to Pressure, Extends Child Care Credit to Low Income Families
Yesterday, the U.S. Senate agreed, and moved to expand the credit to 12 million families with incomes between $10,500 and $26,625. The move would provide low income families with the same $400 rebate check that 25 million others will receive later this summer.
Republicans had originally blocked the tax credit from reaching this group because they argued that it was a credit against taxes paid, and those in this lower income tax group did not pay any taxes in the first place. Historically, tax credits have been viewed by some as a way to encourage workers to stay in the workforce and off the welfare system.
In addition to the extension of the credit to lower income families, the Senate has agreed to increase the amount that married taxpayers can earn before the credit begins to decrease. These changes won't take effect until 2008, when married couples making up to $115,000 can claim the full credit.
The Senate also took one bold step towards "simplification" by agreeing to only one definition of "child" for various income tax deductions - previous law saw up to five different definitions of "child" for these calculations.
The bill will now go to the House of Representatives where it will be acted upon by June 23, 2003.