The deadline for organizations to join the letter being distributed by the Coalition on Human Needs urging Congress to make the Child Tax Credit (CTC) fully accessible to low-income working families has been extended to Monday, February 2. If you are authorized to sign on behalf of an organization, click here. If you are not authorized to sign on behalf on an organization but you still want to support this change, click here to send an email to your members of Congress asking for their support.
The House stimulus bill would make the existing $1,000 Child Tax Credit (CTC) more accessible to low-income families by making the refundable portion of the credit equal to 15 percent of a family's earnings (up to the existing maximum credit of $1,000 per child). Under current law, the refundable portion is limited to 15 percent of earnings above $12,550 in 2009 (this threshold is indexed for inflation). That means someone with income below $12,550 is actually too poor to benefit from the CTC. The Senate version would improve the CTC, but not nearly as much because it would lower the earnings threshold to $6,000.
Families who work and pay federal payroll taxes but do not earn enough to owe federal income taxes usually do not benefit from an income tax cut unless it takes the form of a refundable credit. The limitation on refundability of the CTC has resulted in many of the poorest families being excluded from its benefits. Equally important is the fact that expanding refundable tax credits is more likely to be effective economic stimulus than many other tax cuts that are being proposed according to Mark Zandi of Moody's Economy.com and other economists. This is because it puts money in the hands of people who are likely to spend it quickly, giving our economy the boost in demand for goods and services that economists believe will mitigate the recession.