Congress should prioritize tax credits for working families, not business

If you had any doubt about the real priorities of the current Congress, you need look no further than the ongoing debate over the tax code. Our representatives seem more concerned with pleasing big business than helping to support working families.  

A focus of Congress this year has been continuing of a series of tax breaks for big business, known as the tax extenders, which expired at the end of 2014. These tax breaks have been instrumental in allowing companies like General Electric to get away with paying low or even negative income tax rates each year. Making matters worse, lawmakers not only want to extend these tax provisions as they have done in the past, but in recent weeks they have actually pushed legislation making these tax breaks a permanent part of the tax code.  

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At the same time, very little attention has been paid to the fate of two tax credits that actually matter to working families: the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). Congress expanded both credits as part of the American Recovery and Reinvestment Act (ARRA) in 2009, but these provisions are set to expire at the end of 2017. 

The EITC and CTC both have a proven track record of helping lift low-income families out of poverty. What makes these tax credits so vital is that the value increases as earnings rise (up to certain points). For low-income working families, this incentivizes work and can mean more income to help make ends meet. These two tax credits lifted 9.4 million people out of poverty in 2013, making them among the most important anti-poverty programs in the United States. The temporary expansions to these credits include sensible tweaks designed to make them even more available to working families with children living near or below the poverty line.  

If Congress allows expansions to the EITC and CTC to expire, 13 million families with nearly 25 million children would see an average tax hike of $1,073. To a family working to stretch every dollar, losing $1,073 would be a critical blow. Protecting working families should be a priority for Congress.

Fortunately, sensible voices on Capitol Hill are calling for strengthening these important tax provisions. For example, both President Barack ObamaBarack ObamaDonald Trump will make our economy great again Clinton proposes 'reserve' program for volunteers Trump’s law and order promises won’t make America any safer MORE and Republican Rep. Paul RyanPaul RyanGOP lawmakers slam secret agreement to help lift Iran bank sanctions 9/11 bill is a global blunder that will weaken US efforts abroad Dear Speaker Ryan: your 'forward-looking agenda' ignores climate change MORE recently have proposed further expanding the EITC to low-income childless workers who currently receive either little or no benefit from this credit.  

But instead of building on proposals and having an ongoing conversation about these cost-effective tax breaks that keep millions of children and families out of poverty, congressional leaders instead are prioritizing extending tax breaks for business, at an annual cost of up to $70 billion. The tax breaks include a dubious research credit, the definition of which is so broad that fast food companies can take the credit for exploring ways to replace workers with machines. It also includes “bonus depreciation,” a break that has allowed PG&E to pay zero in taxes for the last seven years.

The difference between tax credits for businesses and tax credits for families, of course, is that the latter have well-funded lobbyists doing their bidding. Some have attempted to shame lawmakers by arguing they should pass these expanded tax credits for working families if they’re going to pass the taxes for business. But that’s a false dilemma.  

The EITC and CTC cost less than the business tax breaks ($14 billion annually) and benefit millions of families. These vital credits should be made permanent on the basis of their effectiveness in increasing opportunity for families and should not be contingent on Congress passing unrelated and unneeded tax breaks for big business.

McIntyre is the director of Citizens for Tax Justice.