Republican Lawmakers Propose Robbing Peter, Err, Children to Pay Paul

Feb 10, 2012

By Alan W. Houseman

Congress has turned its attention to the full-year extension of the payroll tax cut and federal unemployment insurance (UI), currently set to expire this month. While the bill as a whole has received considerable media coverage, little attention has been paid to a proposal that would restrict eligibility for the Child Tax Credit. 

This proposal would help pay for the needed UI benefits extension and payroll tax cut by restricting eligibility for the Child Tax Credit. Working parents who file and pay income taxes using an Individual Taxpayer Identification Number (ITIN) would lose the ability to claim the credit.

Extending the payroll tax cut and federal unemployment insurance is essential to protecting families and our fragile economic recovery. But it is repugnant to our values as a nation and wrong-headed policy to make children in low-income families bear the burden of paying for this tax package, especially when some lawmakers refuse to consider closing unnecessary tax loopholes or asking millionaires and corporations to pay their fair share.

The purpose of the Child Tax Credit, and in particular the refundable portion (called the Additional Child Tax Credit), is to reduce child poverty. The Child Tax Credit kept 1.3 million children out of poverty in 2009. Restricting access to the Child Tax Credit would affect nearly five million children in low-income, tax-paying families. The typical taxpayer harmed by this proposal earns just $21,240 per year and would lose $1,800—a significant percent of their annual income—as a result of the cut. Losing this income would adversely affect families' ability to put food on the table or pay for basic necessities such as rent or heat. This perverse policy also would counteract the boost to consumers and the economy that the payroll tax cut is meant to produce. 

Children of immigrants would largely be affected by this proposal. They make up nearly one-quarter of the nation's child population and will be a significant portion of the nation's workforce in the years to come. In 2010, nearly 30 percent of children with foreign-born parents were poor. Children of immigrants are far more likely to live in food-insecure households and are more likely to suffer from fair or poor health. Instead of driving  children of immigrants into deeper poverty, we should be adopting policies that effectively prevent or reduce poverty and enable children to develop to their full potential.

It is time to say no. Congress should extend federal unemployment benefits and the payroll tax cuts but should not use America's poorest and most vulnerable children as a revenue source. Instead Congress should protect immigrant children from harm and pursue policies that enhance their potential, improve their well-being and open opportunities for them to thrive.

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