From the VITA Field to Capitol Hill, Let's Extend Tax Benefits for Working Families
With so much hanging in the balance, the VITA field must continue to advocate for the expanding the EITC, CTC, and American Opportunity Credit. These are tax benefits that working families simply cannot afford to lose.
Last week, our Advocacy Team spent three days on Capitol Hill advocating for permanent expansion of the vital tax credits included in the American Recovery & Reinvestment Act (ARRA). ARRA took a number of steps to increase income tax fairness, while improving access to tax benefits that were previously off limits to millions of families. The Recovery Act expanded:
- Earned Income Tax Credit: ARRA created a new tier for working parents with three or more children and improved the EITC for married couples. Both of these changes must be made permanent.
- Child Tax Credit: The Child Tax Credit is meant to help defray the cost of raising children, but until ARRA, many working parents earned too little to benefit from the credit. We must make the $3,000 income threshold permanent, making the refundable part of the Child Tax Credit available to most working parents.
- American Opportunity Tax Credit: At one time, education tax benefits were for the most part off limits to low-income families. ARRA changed this fact by a creating a new credit that is available to most families and covers both tuition and expenses that are not paid for by grants or scholarships.
These tax credits along with the 2001 and 2003 “Bush tax cuts” are set to expire December 31, 2010. Although the news stories seem to focus on what impact these expiring tax cuts will have on wealthy households, we have to continue to make a case for why the tax benefits are so vital to our working families.
As our VITA field starts to prepare this fall for the upcoming tax season, this Congressional debate will certainly impact the hard working families we serve. The EITC and the CTC have provided not only a boost in income but an incentive to work for middle income families. For example, extending the CTC will help a single parent with two children working full-time at minimum wage claim a child tax credit of $1,750. This parent would only receive $270 if the tax credits are allowed to go back to their 2001 levels. Furthermore, permanently extending the EITC will help married couples and families with three or more children access the tax credit. These are tax benefits that working families simply cannot afford to lose.
The bottom line is that the tax cut topic is escalating rapidly and will probably dominate the debate on Capitol Hill this fall. President Obama’s plan involves extending all the tax cuts with the exception of the individuals making over $200,000 and couples making over $250,000. Some are concerned that there may be one or two year extension for all the tax cuts. This raises serious concerns about our national debt and potential revenue loss. A third theory suggests that the middle income tax cuts will be made permanent and the wealthy tax cuts will be temporarily extended (1-2 years). Here is an interesting comparison of the plans by the Americans for Responsible Taxes.
With so much hanging in the balance for hard working families, the VITA field must continue to advocate for the EITC and the CTC. At NCTC, we will continue to make visits on Capitol Hill and encourage our affiliates to reach out to Congressional members within their districts. If you have not done so, please Join the Virtual Rally to Permanently Expand Vital Tax Credits.
