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Tax Cut For Child Credit Will Not Extend to Lower Income Families
Aired June 2, 2003 - 20:31 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANDERSON COOPER, CNN ANCHOR: Now we move to a developing story in Washington and there may somebody money in it for you. Here's our congressional correspondent Jonathan Karl.
JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Yes, Anderson, there may somebody money. There's a lot of controversy here -- Anderson, there's a lot of controversy around it. One of the, perhaps, most popular features of the tax cut, and that the child tax credit. Popular because for many families it will actually mean checks in the mail from the Treasury Department this summer.
Here's how that tax cut is supposed to work. Take a family of -- a family with two children, living in Birmingham, Alabama. One parent is a tow truck operator, another a school secretary, combined income of $49,000. Under this, they will receive a check this summer of $800. And that's because the tax bill increases the child tax credit from $600 to $1,000. A $400 increase per child. That's how the tax cut is supposed to work.
COOPER: I know there has been a lot of controversy over this, Jonathan. Who isn't receiving the tax cut?
KARL: Well, therein lies the controversy. Originally as passed by the Senate this tax cut would be for all families including those that don't pay any income taxes. A last minute change, however, put it that only those that actually pay income taxes would get the credit.
So take a look at this family. A family in Lodi, California. One parent a fast food cook, another parent a stay at home parent, combined income $14,000, two kids, nothing in the mail from the IRS because they don't actually pay any income taxes and now this tax cut only goes to taxpayers. Doesn't go as a tax credit to anybody who earns a wage.
Now the chairman of the Senate Finance Committee, a Republican, says it was a mistake to leave those low income families out of this. He is saying that he will push to change this so that all families will get that tax credit including low income families. He actually in an interview today with CNN blamed Democrats for this problem and insisting that the tax cut be only $350 billion in total cost.
(BEGIN VIDEO CLIP) SEN. CHARLES GRASSLEY (R), IOWA: We passed it in the Senate because we believed in it and it is a good thing to tie the two together. And if it hadn't been for $350 billion cap on the tax bill that was imposed upon us by Democrats not wanting to cooperate with us it would have been done in the first place.
(END VIDEO CLIP)
KARL: Now the other thing they did because they had to work within that $350 billion limit is they made this child tax credit effective, Anderson, for two years. So unless it's extended this would only be a two-year tax cut. It would disappear on the year 2005 -- Anderson.
COOPER: All right, Jonathan Karl, thanks very much.
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