Plan B Would Hurt Low-Income Working Families
Plan B would hurt families like Heather Rude-Turner's. Rude-Turner credits the Earned Income Tax Credit with helping her get back on her feet and allowing her family stay out of poverty. (Laura Elizabeth Pohl/Bread for the World)
[UPDATE, 8:30 p.m. The House did not take up the "Plan B" measure this evening as planned. The House adjourned and will return after Christmas.]
By Amelia Kegan
Are you frantically making final preparations for Christmas? So is the House of Representatives. The House is trying to take some action—any action—so its members can say they have done something in response to the impending fiscal cliff. But when we’re dealing with issues this important and this big, we shouldn’t be content with a half-baked proposal—especially one that would hurt low-income working families.
This evening, the House will vote on H. Res. 66, also known as “Plan B.” This bill would extend many of the 2001 and 2003 tax cuts for the first $1 million of income. But Plan B fails to address the real problem: the long-term deficit problem and the approaching fiscal cliff. The bill raises only $300 billion over ten years. That is a far cry from the $2 trillion in deficit reduction needed to put the country on a fiscally sustainable path. The resulting spending cuts required would devastate our country’s ability to address hunger and help people, both in the United States and abroad, move out of poverty. Under Plan B, even multi-millionaires would receive a tax cut. Only income earned above and beyond the first $1 million would be taxed at the 2000 tax rate of 39.6 percent. The Tax Policy Center estimates that Plan B would allow millionaires an average tax cut of over $100,000, compared to current law.
But the most disappointing part of this bill is what it would do to poor working families. Plan B ends the 2009 improvements to the Earned Income Tax Credit (EITC) and Child Tax Credit. These tax credits help more Americans escape poverty than any other anti-poverty program in the country. In 2011, the EITC and Child Tax Credit lifted 8.3 million people out of poverty. These credits reward work, promote economic mobility, and help struggling working parents put food on the table. A majority of EITC recipients only receive the credit for one or two years before moving to higher income levels. That is exactly what we want our anti-poverty programs to be doing. Why would we want to cut programs that are doing so much to help low-income working families move out of poverty and into the middle class?
But that is exactly what Plan B does. If enacted
- Over 13 million families, including 25 million children, would see their EITC and Child Tax Credit benefits reduced or eliminated.
- Nearly 3.75 million families, including almost 6 million children, would lose access to the Child Tax Credit entirely.
And this is just one of the bills the House will be voting on in response to the fiscal cliff. The other (H.R. 6684) includes drastic cuts to the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), cuts the Child Tax Credit further, and eliminates the Social Services Block Grant, which helps fund Meals on Wheels, services for seniors and children who are victims of abuse or neglect, and child care for low-income families.
Plan B isn’t an answer. It would harm millions of low-income families. Congress should stick with Plan A. They’ve been debating deficit reduction for the past two years at the expense of many other necessary priorities.
Christmas is a time of hope, promise, and togetherness. This is a moment when members of Congress should seek common ground and work together to solve our nation’s fiscal challenges while remembering that we have a responsibility to our most poor and vulnerable brothers and sisters. It’s time for Congress to set aside politics. Rather than voting on a proposal merely to say they’ve voted on something, Congress should do the work to negotiate a comprehensive, balanced, bipartisan plan that addresses our long-term deficits and prioritizes a commitment to ending hunger in the U.S. and around the world.
Amelia Kegan is Bread for the World's senior policy analyst.
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