House Report 113-527 - CHILD TAX CREDIT IMPROVEMENT ACT OF 2014

[House Report 113-527]
[From the U.S. Government Publishing Office]

113th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 113-527

======================================================================

CHILD TAX CREDIT IMPROVEMENT ACT OF 2014

_______

July 17, 2014.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed

_______

Mr. Camp, from the Committee on Ways and Means, submitted the following

R E P O R T

together with

DISSENTING VIEWS

[To accompany H.R. 4935]

[Including cost estimate of the Congressional Budget Office]

The Committee on Ways and Means, to whom was referred the
bill (H.R. 4935) to amend the Internal Revenue Code of 1986 to
make improvements to the child tax credit, having considered
the same, report favorably thereon with an amendment and
recommend that the bill as amended do pass.

CONTENTS

Page
I. SUMMARY AND BACKGROUND...........................................2
A. Purpose and Summary................................. 2
B. Background and Need for Legislation................. 2
C. Legislative History................................. 3
II. EXPLANATION OF THE BILL..........................................3
A. Modification of Child Tax Credit (sec. 24 of the
Code).............................................. 3
III. VOTES OF THE COMMITTEE...........................................4
IV. BUDGET EFFECTS OF THE BILL.......................................5
A. Committee Estimate of Budgetary Effects............. 5
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 7
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 7
D. Macroeconomic Impact Analysis....................... 10
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......10
A. Committee Oversight Findings and Recommendations.... 10
B. Statement of General Performance Goals and
Objectives......................................... 10
C. Information Relating to Unfunded Mandates........... 10
D. Applicability of House Rule XXI 5(b)................ 10
E. Tax Complexity Analysis............................. 10
F. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 14
G. Duplication of Federal Programs..................... 14
H. Disclosure of Directed Rule Makings................. 14
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........14
VII. DISSENTING VIEWS................................................16
The amendment is as follows:
Strike all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Child Tax Credit Improvement Act of
2014''.

SEC. 2. IMPROVEMENTS TO CHILD TAX CREDIT.

(a) Elimination of Marriage Penalty.--Section 24(b)(2) of the
Internal Revenue Code of 1986 is amended by striking ``means--'' and
all that follows and inserting ``means $75,000 (twice such amount in
the case of a joint return).''.
(b) Inflation Adjustment of Credit Amount and Phaseout Thresholds.--
Section 24 of such Code is amended by adding at the end the following
new subsection:
``(g) Inflation Adjustment.--
``(1) In general.--In the case of any taxable year beginning
after 2014, the $1,000 amount in subsection (a) and the $75,000
amount in subsection (b)(2) shall each be increased by an
amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the
taxable year begins, determined by substituting
`calendar year 2013' for `calendar year 1992' in
subparagraph (B) thereof.
``(2) Rounding.--Any increase determined under paragraph (1)
shall be rounded--
``(A) in the case of the $1,000 amount in subsection
(a), to the nearest multiple of $50, and
``(B) in the case of the $75,000 amount in subsection
(b)(2), to the nearest multiple of $1,000.''.
(c) Effective Date.--The amendments made by this section shall apply
to taxable years beginning after December 31, 2014.

I. SUMMARY AND BACKGROUND

A. Purpose and Summary

H.R. 4935, reported by the Committee on Ways and Means,
provides for elimination of the marriage penalty within the
child tax credit by raising the phaseout threshold for joint
filers from $110,000 to $150,000. H.R. 4935 also indexes the
phaseout thresholds and the $1,000 credit amount for inflation
for taxable years beginning after December 31, 2014.

B. Background and Need for Legislation

While the Committee continues actively to pursue
comprehensive tax reform as a critical means of promoting
economic growth, job creation, and tax simplification, the
Committee also believes that it is important to act immediately
to provide permanent tax relief for American families. By
eliminating the marriage penalty in the child tax credit and
indexing the $1,000 credit amount and income phase-outs for
inflation, H.R. 4935 would treat married couples raising
children more fairly, while also ensuring that the value of the
child credit is not eroded by inflation.

C. Legislative History

Background

H.R. 4935 was introduced on June 23, 2014, and was referred
to the Committee on Ways and Means.

Committee action

The Committee on Ways and Means marked up H.R. 4935, the
``Child Tax Credit Improvement Act of 2014,'' on June 25, 2014,
and ordered the bill, as amended, favorably reported (with a
quorum being present).

Committee hearings

The importance of, and need for improvements in, the child
tax credit were discussed at no fewer than three hearings
during the 112th and 113th Congresses:
Full Committee hearing on How the Tax Code's
Burdens on Individuals and Families Demonstrate the Need for
Comprehensive Tax Reform (April 13, 2011).
Oversight Subcommittee hearing on Improper
Payments in the Administration of Refundable Tax Credits (May
25, 2011).
Full Committee hearing on the President's Fiscal
Year 2015 Budget Proposal with the U.S. Department of the
Treasury Secretary Jacob J. Lew (Mar. 6, 2014).

II. EXPLANATION OF THE BILL

A. Modification of Child Tax Credit (sec. 24 of the Code)

PRESENT LAW

An individual may claim a tax credit for each qualifying
child under the age of 17.\1\ The amount of the credit per
child is $1,000.\2\ A child who is not a citizen, national, or
resident of the United States cannot be a qualifying child.
---------------------------------------------------------------------------
\1\Sec. 24(c)(1). Unless otherwise stated, all section references
are to the Internal Revenue Code of 1986, as amended (the ``Code'').
\2\Sec. 24(a).
---------------------------------------------------------------------------
The aggregate amount of child credits that may be claimed
is phased out for individuals with modified adjusted gross
income (``MAGI'') over a threshold amount. Specifically, the
otherwise allowable child tax credit is reduced by $50 for each
$1,000 (or fraction thereof) of MAGI over $75,000 for unmarried
taxpayers, $110,000 for married individuals filing joint
returns, and $55,000 for married individuals filing separate
returns. For purposes of this limitation, MAGI includes certain
otherwise excludable income earned by U.S. citizens or
residents living abroad or in certain U.S. territories. These
dollar amounts are not indexed for inflation.
The credit is allowable against both the regular tax and
the alternative minimum tax. To the extent the child credit
exceeds the taxpayer's tax liability, the credit is refundable
in an amount equal to 15 percent of the taxpayer's earned
income in excess of a threshold dollar amount (the ``earned
income'' formula).\3\ For taxable years beginning before
January 1, 2018, the dollar amount is $3,000 (not indexed for
inflation). For taxable years beginning after December 31,
2017, the dollar amount is $10,000 (indexed for inflation after
2000). The staff of the Joint Committee on Taxation estimates
that the indexed $10,000 amount would be $13,600 in 2014.
---------------------------------------------------------------------------
\3\Sec. 24(d). The refundable portion of the credit is referred to
as the ``additional child tax credit.''
---------------------------------------------------------------------------
A taxpayer with three or more children may determine the
refundable portion of the child tax credit using an
``alternative formula,'' if it results in a larger refundable
credit than determined under the earned income formula. Under
the alternative formula, the additional child tax credit equals
the amount by which the employee share of the taxpayer's Social
Security taxes exceed the taxpayer's earned income credit.\4\
---------------------------------------------------------------------------
\4\Sec. 24(d)(1)(B)(ii).
---------------------------------------------------------------------------
Earned income is defined as the sum of wages, salaries,
tips, and other taxable employee compensation plus net self-
employment earnings which are taken into account in computing
the individual's taxable income. Otherwise excludable combat
pay is treated as earned income for these purposes.
For a credit to be allowable with respect to any child, the
name and taxpayer identification number of the child must be
included on the taxpayer's tax return.\5\
---------------------------------------------------------------------------
\5\Sec. 24(e).
---------------------------------------------------------------------------

REASONS FOR CHANGE

The Committee believes that a tax credit for families with
children recognizes the expense of raising children and the
importance of helping families raise children. Accordingly, the
Committee believes that indexing for inflation both the credit
amount and the phaseout thresholds of the child tax credit is
an important means of ensuring that the value of the credit is
not diluted.
Additionally, the Committee believes that, where possible,
marriage penalties in the tax code should be eliminated. By
increasing the phaseout threshold for married taxpayers who
file joint returns to twice that of unmarried taxpayers, the
bill eliminates marriage penalties with respect to the child
credit.

EXPLANATION OF PROVISION

The proposal modifies the child tax credit in three ways.
First, the $1,000 credit amount is indexed for inflation to the
nearest multiple of $50 in calendar years beginning after 2014.
Second, the beginning of the child credit phaseout for joint
filers is increased from $110,000 to $150,000 (for married
individuals filing separate returns, the amount applicable to
an unmarried individual, i.e., $75,000, applies). Third, the
income phaseout thresholds are indexed for inflation to the
nearest $1,000 in calendar years beginning after 2014.

EFFECTIVE DATE

The proposal applies to taxable years beginning after
December 31, 2014.

III. VOTES OF THE COMMITTEE

In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the vote of the Committee on Ways and Means in its
consideration of H.R. 4935, the Child Tax Credit Improvement
Act of 2014, on June 25, 2014.
The bill, H.R. 4935, was ordered favorably reported as
amended by a roll call vote of 22 yeas to 15 nays (with a
quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp....................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Rangel....... ........ ........ .........
Mr. Brady...................... X ........ ......... Mr. McDermott.... ........ X .........
Mr. Ryan....................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Becerra...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Boustany................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Gerlach.................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Price...................... X ........ ......... Mr. Kind......... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Pascrell..... ........ X .........
Mr. Smith...................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Schock..................... X ........ ......... Ms. Schwartz..... ........ X .........
Ms. Jenkins.................... X ........ ......... Mr. Davis........ ........ X .........
Mr. Paulsen.................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Marchant................... X ........ .........
Ms. Black...................... X ........ .........
Mr. Reed....................... ........ ........ .........
Mr. Young...................... X ........ .........
Mr. Kelly...................... X ........ .........
Mr. Griffin.................... X ........ .........
Mr. Renacci.................... X ........ .........
----------------------------------------------------------------------------------------------------------------

IV. BUDGET EFFECTS OF THE BILL

A. Committee Estimate of Budgetary Effects

In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 4935, as
reported.
The bill, as reported, is estimated to have the following
effect on Federal budget receipts for fiscal years 2014-2024
(with no effect on such receipts in fiscal year 2014):

FISCAL YEARS
[Billions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Item 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015-19 2015-24
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Revenues\1\..................................... -0.7 -4.7 -7.8 -9.4 -10.9 -12.4 -14.6 -16.1 -18.4 -20.0 -33.5 -114.9
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Details do not add to total due to rounding.

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015-19 2015-24

\1\Estimate contains the following outlay .......... \2\ 1.6 1.6 2.0 2.0 2.9 3.0 4.0 4.0 5.2 21.0
effects. . ....................................

\2\Gain of less than $50 million.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority

In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves new or increased budget authority. The Committee
further states that the revenue-reducing tax provisions involve
increased tax expenditures. (See amounts in table in Part IV.A,
above.)

C. Cost Estimate Prepared by the Congressional Budget Office

In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided:

U.S. Congress,
Congressional Budget Office,
Washington, DC, July 3, 2014.
Hon. Dave Camp,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4935, the Child
Tax Credit Improvement Act of 2014.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Logan
Timmerhoff.
Sincerely,
Douglas W. Elmendorf.
Enclosure.

H.R. 4935--Child Tax Credit Improvement Act of 2014

H.R. 4935 would increase the amount of the child tax credit
and the income thresholds at which the credit begins to phase
out for taxpayers. Under current law, an individual may claim a
tax credit of $1,000 for each qualifying child under the age of
17. H.R. 4935 would index the $1,000 amount for inflation
starting in 2015. In addition, under current law the aggregate
amount of child credits that may be claimed is phased out for
married individuals filing joint tax returns with modified
adjusted gross income over $110,000 and for unmarried
individuals with such income over $75,000. H.R. 4935 would
increase the beginning of the phaseout for joint filers to
$150,000, and it would index for inflation the beginning points
of the income phaseouts for all taxpayers starting in 2015. For
married taxpayers filing separately, the beginning of the
income phaseout would increase from $55,000 under current law
to $75,000, indexed for inflation.
The staff of the Joint Committee on Taxation (JCT)
estimates that enacting H.R. 4935 would reduce revenues over
the 2014-2024 period by about $93.9 billion, and increase
direct spending by about $21.0 billion over that period. JCT
therefore estimates that enacting the legislation would
increase federal budget deficits by about $114.9 billion over
the 2014-2024 period.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
direct spending and revenues. Because enacting H.R. 4935 would
affect revenues and direct spending, pay-as-you-go procedures
apply. The net changes in revenues and outlays that are subject
to pay-as-you-go procedures are shown in the following table.
JCT has determined that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Logan
Timmerhoff. The estimate was approved by David Weiner,
Assistant Director for Tax Analysis.

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 4935, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON JUNE 25, 2014
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------------------------------------------------------------------------
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014-2019 2014-2024
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN THE DEFICIT

Statutory Pay-As-You-Go Effects..... 0 724 4,687 7,799 9,388 10,896 12,362 14,557 16,100 18,352 19,994 33,494 114,860
Memorandum:
Changes in Outlays.............. 0 0 33 1,565 1,598 1,962 1,978 2,941 2,964 3,954 3,982 5,158 20,977
Changes in Revenues............. 0 -724 -4,654 -6,234 -7,790 -8,934 -10,384 -11,616 -13,136 -14,398 -16,012 -28,336 -93,883
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
Note: Components may not sum to totals because of rounding.

D. Macroeconomic Impact Analysis

In compliance with clause 3(h)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made by the Joint Committee on Taxation with respect to the
provisions of the bill amending the Internal Revenue Code of
1986: the effects of the bill on economic activity are so small
as to be incalculable within the context of a model of the
aggregate economy.

V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

A. Committee Oversight Findings and Recommendations

With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee advises that it was as a result of the
Committee's review of the provisions of H.R. 4935 that the
Committee concluded that it is appropriate to report the bill,
as amended, favorably to the House of Representatives with the
recommendation that the bill do pass.

B. Statement of General Performance Goals and Objectives

With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.

C. Information Relating to Unfunded Mandates

This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.

D. Applicability of House Rule XXI 5(b)

Rule XXI 5(b) of the Rules of the House of Representatives
provides, in part, that ``A bill or joint resolution,
amendment, or conference report carrying a Federal income tax
rate increase may not be considered as passed or agreed to
unless so determined by a vote of not less than three-fifths of
the Members voting, a quorum being present.'' The Committee has
carefully reviewed the bill, and states that the bill does not
involve any Federal income tax rate increases within the
meaning of the rule.

E. Tax Complexity Analysis

The following statement is made pursuant to clause 3(h)(1)
of rule XIII of the Rules of the House of Representatives.
Section 4022(b) of the Internal Revenue Service Restructuring
and Reform Act of 1998 requires the staff of the Joint
Committee on Taxation (in consultation with the Internal
Revenue Service and the Treasury Department) to provide a tax
complexity analysis. The complexity analysis is required for
all legislation reported by the Senate Committee on Finance,
the House Committee on Ways and Means, or any committee of
conference if the legislation includes a provision that
directly or indirectly amends the Internal Revenue Code and has
widespread applicability to individuals or small businesses.
For each such provision identified by the staff of the Joint
Committee on Taxation a summary description of the provision is
provided along with an estimate of the number and type of
affected taxpayers, and a discussion regarding the relevant
complexity and administrative issues.
Following the analysis of the staff of the Joint Committee
on Taxation are the comments of the IRS and Treasury regarding
each of the provisions included in the complexity analysis.

1. Modifications to child tax credit

Summary description of the provisions
The proposal modifies the child tax credit in three ways.
First, the $1,000 credit amount is indexed for inflation to the
nearest multiple of $50 in calendar years beginning after 2014.
Second, the beginning of the child credit phaseout for joint
filers is increased from $110,000 to $150,000 (for married
individuals filing separate returns, the amount applicable to
an unmarried individual, i.e., $75,000, applies). Third, the
income phaseout thresholds are indexed for inflation to the
nearest $1,000 in calendar years beginning after 2014.
Number of affected taxpayers
It is estimated that the provision will affect over ten
percent of small business tax returns.
Discussion
While many taxpayers claim the child tax credit, the
modifications to the child tax credit contained in the bill are
not likely to either increase or reduce the compliance burden
on affected taxpayers.

F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits

With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill, and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.

G. Duplication of Federal Programs

In compliance with sec. 3(j)(2) of H. Res. 5 (113th
Congress), the Committee states that no provision of the bill
establishes or reauthorizes: (1) a program of the Federal
Government known to be duplicative of another Federal program,
(2) a program included in any report from the Government
Accountability Office to Congress pursuant to section 21 of
Public Law 111-139, or (3) a program related to a program
identified in the most recent Catalog of Federal Domestic
Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).

H. Disclosure of Directed Rule Makings

In compliance with sec. 3(k) of H. Res. 5 (113th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):

SECTION 24 OF THE INTERNAL REVENUE CODE OF 1986

SEC. 24. CHILD TAX CREDIT.

(a) * * *
(b) Limitations.--
(1) * * *
(2) Threshold amount.--For purposes of paragraph (1),
the term ``threshold amount'' [means--
[(A) $110,000 in the case of a joint return,
[(B) $75,000 in the case of an individual who
is not married, and
[(C) $55,000 in the case of a married
individual filing a separate return.
For purposes of this paragraph, marital status shall be
determined under section 7703.] means $75,000 (twice
such amount in the case of a joint return).

* * * * * * *

(g) Inflation Adjustment.--
(1) In general.--In the case of any taxable year
beginning after 2014, the $1,000 amount in subsection
(a) and the $75,000 amount in subsection (b)(2) shall
each be increased by an amount equal to--
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in
which the taxable year begins, determined by
substituting ``calendar year 2013'' for
``calendar year 1992'' in subparagraph (B)
thereof.
(2) Rounding.--Any increase determined under
paragraph (1) shall be rounded--
(A) in the case of the $1,000 amount in
subsection (a), to the nearest multiple of $50,
and
(B) in the case of the $75,000 amount in
subsection (b)(2), to the nearest multiple of
$1,000.

VII. DISSENTING VIEWS

Notwithstanding that there is strong support for making
improvements to the Child Tax Credit, we opposed this bill
because it leaves behind the expansions to the refundable
portion of the Child Tax Credit that will expire in 2017.
The bill does nothing to provide certainty to, and address
the child-rearing costs of, low-income working families in the
future, because it does not make permanent the expansions to
the refundable portion of the Child Tax Credit. The expansions
ensure that low-income families are able to benefit from this
credit. One of these expansions reduces the threshold level of
income that must be earned to qualify for the refundable
portion of the Child Tax Credit. The reduction in the threshold
is vitally important for low-income families.
While failing to make permanent the expansions that benefit
low-income families, the bill expands and makes permanent the
availability of the Child Tax Credit to many new, upper middle-
income families whose incomes are too high to qualify for the
credit under current law. Under the bill, families making
between $150,000 and $205,000 who have children would be newly
eligible for the Child Tax Credit, and will continue to be
eligible for the Child Tax Credit in 2018 and beyond. However,
because the bill does not make permanent the expansions that
benefit low-income families, a family making minimum wage would
lose a portion of their credit in 2018 and going forward due to
the increased threshold for the refundable portion of the
credit. We oppose this disparity in the treatment of these
families.
In addition to our substantive concerns with the bill, we
also believe that it should not be made permanent by adding to
the deficit without any revenue offset. In three short months,
Republicans on the Committee have approved 14 tax bills that
would add a stunning $825 billion to the deficit and there does
not appear to be an end in sight. Chairman Camp's Tax Reform
Act of 2014 discussion draft (the ``Republican tax reform
plan'') was revenue neutral and did not add to the deficit.
These bills are going in the opposite direction. We should be
considering these bills in the context of a revenue-neutral,
bipartisan tax reform plan.
To put the combined $825 billion cost into context, it is
1.7 times the entire projected federal deficit for this year
and $241 billion more than what the total non-defense
discretionary spending (e.g., medical research, education,
veterans' pensions and health care, transportation, etc.) will
be in 2014. It is more than nine times what we spend annually
on education, job training, and social services. It is almost
14 times what we appropriate for veterans' health care and
benefits in a year, and it is 27 times more than we spend on
medical research. It is more than we spend to pay earned Social
Security benefits to 58 million Americans--one in four American
families--for a year. Unoffset tax cuts amounting to $825
billion is $2,600 in debt for every man, woman, and child in
the United States.
Make no mistake, this is part of the Republicans' bigger
plan to force cuts in spending in response to the increased
deficit from their reckless tax cuts. Republicans already have
cut non-defense appropriations below the level needed to keep
up with inflation every year since 2011, putting us on a path
to the lowest level of domestic investment (as a percent of
GDP) since we began tracking it in 1962. By 2018, real non-
defense discretionary spending is projected to be 18 percent
lower than it was in 2010. Americans feel those cuts every day.
They result in overcrowded classrooms for our children, fewer
food safety inspections, slower progress on medical research to
fight deadly diseases, delays in highway repairs, waiting lists
for child care, early national park closings, reduced
investment in small businesses, and delays in awarding earned
Medicare and Social Security benefits.
We found it hypocritical that, six months ago, Republicans
let emergency unemployment insurance expire for more than 1.3
million Americans, a number that has now grown to 3 million, by
arguing that an adequate offset had yet to be proposed. In
early April, the Senate came to a bipartisan agreement on an
offset after months of painstaking negotiations. Yet House
Republicans still refuse to act.
Sincerely,
Sander M. Levin,
Ranking Member.