106 posts categorized "Tax Credits"
The House and Senate are both on recess until after the November 6 elections. They are expected to return to Washington as early as November 13. For information on communicating with your members of Congress during this campaign season, contact your regional organizer or use our online election resources.
Election season is in full swing. While members of Congress finalized a stop-gap spending bill that will fund federal programs through March of next year, they put off acting on other pieces of legislation, including the farm bill. After November, members of Congress will make difficult decisions about deficit reduction, particularly the $1.2 trillion in across-the-board cuts scheduled to take effect in January and the expiration of the 2001 and 2003 tax cuts. Bread members must continue to push for a proposal that safeguards programs that help vulnerable people in the United States and abroad.
This week, the Senate passed a six-month continuing resolution (CR, temporarily funding government operations until a budget is passed) to fund federal discretionary programs at roughly current levels, plus a 0.6 percent increase for the first part of the 2013 fiscal year. The CR also included a clean six-month extension of Temporary Assistance for Needy Families (TANF). The negotiated CR does not alter the path of scheduled across-the-board spending cuts, or sequestration, which is still scheduled to go into effect January 2. The House passed the CR last week.
The House and Senate left Washington without taking action on the farm bill—a bill governing federal farm and food policy. The current farm bill is set to expire on September 30, 2012. This legislation governs domestic nutrition programs, including the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), and international food aid programs that are vital to hungry and poor people. Leadership in both chambers have indicated that they will take action on the farm bill after the elections, during the lame duck session of Congress. The Senate continues to push for a full five-year reauthorization of the farm bill while the House is open to a temporary extension with the full bill being resolved next year. How leaders decide to move forward will be informed by the outcome of November elections.
While farm programs technically expire on September 30, harmful administrative changes (like federal farm commodity price supports reverting to 1949 law) will not go into effect right away. The 2008 farm bill covers all of 2012’s calendar year crops, allowing some wiggle room for Congress to decide how to move forward. Additionally, provisions included in the continuing resolution secure SNAP funding through next year. The last time the farm bill was allowed to expire was in 2007, when the bill expired on September and an extension was not passed until December 26.
The bipartisan group of Senators called the Gang of Eight continues its work to develop a comprehensive, bipartisan package that would replace the sequester and expiring tax cuts with a framework for deficit reduction, including additional tax revenues and further spending cuts. While producing a deal laying out the specifics of what programs to cut and what taxes to raise is unrealistic for the lame duck session, the proposal could establish a process for committees to find the specific savings. If successful in reaching a deal that Congress enacts, the Gang of Eight proposal could determine the available funding for programs for hungry and poor people for the next 10 years. Those involved in the Gang of Eight include Senators Warner (D-VA), Durbin (D-IL) , Conrad (D-ND), Bennet (D-CO), Chambliss (R-GA), Crapo (R-ID), Coburn (R-OK), and Johanns (R-NE).
More than 80 members have cosponsored House Resolution 760, which rejects the cuts to SNAP included in the proposed House farm bill (H.R. 6083). The resolution is non-binding, but it is an opportunity for members of Congress to show strong support for protecting SNAP by cosponsoring the resolution. We are encouraging Bread members to ask their representatives to cosponsor. A full list of cosponsors can be found online.
On Friday afternoon, Republican Study Committee Chairman Jim Jordan (R-OH), along with Reps. Paul Broun (R-GA), Steve Chabot (R-OH), and Tim Huelskamp (R-KS), introduced a proposal to block-grant farm bill nutrition programs. Under this plan, SNAP, the Emergency Food Assistance Program, Community Food Projects, Commodity Supplemental Food Program, Senior Farmers Market Nutrition Program, and the Fresh Fruit and Vegetable Program would be consolidated into a single block grant to the states, with funding returned to FY2008 levels. Members argue this proposal will streamline programs and give states more flexibility while cutting spending. Like other SNAP block grant proposals introduced this Congress, this proposal will not likely become law, despite possible attempts to attach it to a moving farm bill in the lame duck session. For more information on why block-granting SNAP would be harmful, please see our Block Grants 101 fact sheet.
Special Supplemental Nutrition Program for Women, Infants and Children (WIC) is facing potentially devastating cuts. Although the continuing resolution extends funding through March at levels agreed to last August in the Budget Control Act , WIC is subject to approximately 8.2 percent in automatic cuts on January 2 if Congress fails to come up with a deficit-reduction plan to replace the sequester. These cuts could mean a loss of benefits for more than 700,000 low-income women and young children.
Poverty-focused foreign aid makes up a small part of total discretionary funding, which must be approved by Congress each year in the appropriations process. The continuing resolution funds programs at the Senate levels for FY 2013. PFFA is subject to cuts in January when sequestration is enacted. The programs would take an 8.2 percent cut, according to the OMB report. These cuts could mean lives lost around the world. For example, as a result of the sequester:
- 276,500 fewer people would receive HIV/AIDS treatment, potentially leading to 63,000 more AIDS-related deaths and 124,000 more children being orphaned.
- 656,000 fewer children annually will have access to quality primary school education, making their road to overcoming poverty that much harder.
Earlier in the week, Senator Rand Paul (R-KY) submitted a proposal to cut off aid to several countries, including Pakistan, Libya, and Egypt. The Paul amendment failed by a vote of 10-81.
The Foreign Assistance Transparency and Accountability Act (S. 3310), introduced by Senator Lugar, with support from Senator Rubio, was passed by the Senate Foreign Relations Committee on September 19. The objective of this bill is to improve transparency and accountability within U.S. foreign aid by instituting a standard monitoring and evaluation requirement across all agencies that administer U.S. foreign assistance. Additionally, it calls for information garnered from the evaluations to be made public. The companion legislation is the Poe-Berman bill in the House. Our hope is that both bills will be taken up by the full House and Senate during the lame duck session.
The 2001 and 2003 tax cuts expire at the end of this year, and Congress is in the midst of debating which parts to extend, including the Earned Income Tax Credit (EITC) and the Child Tax Credit.
We expect the tax credits to be an important issue in the lame duck session, along with the rest of the tax cuts. The bipartisan Gang of Eight senators are also looking at the tax credits as part of the tax cuts and possibilities for tax reform.
Food aid is reauthorized in the farm bill process and funded in the appropriations process. Like other discretionary programs, funding is extended at Senate levels for the FY2013 budget as part of the continuing resolution. Food aid is still subject to sequester and may be cut by 8.2 percent, which would result in over 3 million people losing access to vital food assistance and 377,200 fewer children having access to quality primary school education.
By Sarah Godfrey
The now-famous video that shows presidential candidate Mitt Romney talking about “the 47 percent” of Americans who “pay no income tax” has the entire country discussing who does or does not pay taxes. Romney’s remarks have thrust into the spotlight a study that is actually a smart, common-sense analysis of taxation—it shows that everyone, especially the poor, pays.
The "47 percent" figure is taken from a Tax Policy Institute study that found 46.4 percent of Americans did not pay federal income tax in 2011, but even the Institute itself has said its findings have been largely misconstrued. “Commentators have often misinterpreted that percentage as indicating that nearly half of Americans pay no taxes. In fact, however, many of those who don’t pay income tax do pay other taxes—federal payroll and excise taxes as well as state and local income, sales, and property taxes,” the group wrote in a 2011 explanation of its findings.
Derek Thompson, writing in the Atlantic on Sept. 18, put it plainly: “When you hear ‘the 47 percent,' you should think old retired folks and poor working families.” The Washington Post’s Wonk Blog analyzed the same Tax Policy Institute study, and found that of the roughly 47 percent of those who don’t pay income tax, 60 percent are still paying into Social Security and Medicare. Another 22 percent of non-payers are retirees. “Only about 7.9 percent of households are not paying any federal taxes at all,” wrote Brad Plumer. “That’s usually because they’re either unemployed or on disability or students or are very poor.”
And the poor actually often shoulder a greater share of the tax burden relative to their income. A 2012 Citizens for Tax Justice study found that the poorest fifth of Americans, a group with an average cash income of $13,000 per year, saw 17.4 percent of their incomes go to taxes last year.
This is because while income tax is progressive, sales and excise taxes are regressive. A progressive tax increases proportionally as the income of an individual taxpayer rises. However, fixed-rate regressive taxes represent a greater portion of one’s income as that income falls. If you live in Washington state, for example, you pay 6.5 percent sales tax on a tube of toothpaste whether you earn $11 million per year or $11,000 per year. The poor sacrifice a much greater percentage of their earnings to regressive taxes.
And the poor are often less able to escape taxes. To give a basic example, groceries and unprepared foods are typically exempt from sales tax, but in food deserts—poor neighborhoods where it’s hard to find a supermarket, but easy to find fast food restaurants—the residents are unfairly burdened by sales tax when it comes to purchasing food and other necessities.
The non-partisan Institute on Taxation and Economic Policy’s 2009 study “Who Pays?” offers a good primer on how regressive taxation affects the poor. The study assessed the fairness of each state’s tax system, measuring state and local taxes paid by different income groups in 2007. The main finding of the research was that “nearly every state and local tax system takes a much greater share of income from middle- and low-income families than from the wealthy.”
The ten states with the most regressive tax systems asked their poorest residents — those in the bottom 20 percent of the income scale — to pay up to six times as much of their income in taxes as they ask the wealthy to pay.
Tax credits, such as the Earned Income Tax Credit and the Child Tax Credit have helped low-income working families during the recession and assist in offsetting the regressive tax burden shouldered by the poor. These tax credits, which were established with bipartisan support, will expire at the end of the year. Congress is currently debating if these credits will be extended.
Federal income tax is just a sliver of the taxes that are paid in this country, so not paying federal income taxes is not akin to not paying taxes. The old adage that the only certainties in life are death and taxes holds true – for everyone. Unfortunately, the reality of how the tax burden is shared is not always understood.
Sarah Godfrey is Bread for the World's associate editor, online.
The Twin Cities Bread team meets with Rep. Erik Paulsen last month. Pictured: (front row, l to r) Audrey Johnson, Ed Payne, Brad Pepin; (back row, l to r): Gerry Peterson, Dick Johnson, Rep. Paulsen, Judy
Waeschle, Carol Dubay, Lois Troemel. (Photo courtesy of Twin Cities Bread team)
By Robin Stephenson
It is critical for lawmakers to hear from their constituents as we
head into a lame duck session, during which members of Congress will make choices
about programs for hungry and poor people. Bread teams know
that a personal visit is the most influential type of contact with a
member of Congress, so our activists
across the nation have been setting up local meetings.
In Minneapolis, the Twin Cities' Metro Area Team used the fall recess as an opportunity for in-district meetings with Rep. Erik Paulsen and Rep. Betty McCollum. In a recap of their meeting with Rep. Eric Paulsen’s office, the team outlined its approach:
“Our district coordinator, Carol Dubay, arranged the meeting for September 5 and contacted each of us to meet a few minutes ahead of time in order to plan what we would emphasize. Of course, we framed our discussion in terms of the Circle of Protection for the poorest among us. But since the Congressman is on the committee that makes decisions on taxation, we emphasized the need to maintain the benefits of the Earned Income Tax Credit and the Child Tax Credit programs.”
[Read more of the recap on the Twin Cities' Metro Area Team's website.]
The team that met with Rep. McCollum’s office included three young hunger activists:
“Fourteen people, including three preteens, visited the local office of Minnesota representative Betty McCollum during the August recess. They urged her to continue nudging her House colleagues to remember those they represent who are people living with poverty and hunger.
"The young people explained their concern using a visual they had made showing how little of the federal budget goes to help people in need. The group urged Rep. McCollum to remember to keep the 'circle of protection' around specific programs which provide the most effective help to those with less means than most of us but who are may be members of her constituency and are certainly all God’s children. The meeting with the legislative director, Peter Frosch, was one filled with issues, listening, personal stories, encouragement from all sides, and a sense of being of one mind about the needs and some of the solutions.
"Fourteen people went home feeling empowered and willing to visit this office and the offices of senators again.”
Robin Stephenson is Bread for the World's social media lead and senior regional organizer, western hub.
A weekly legislative update from Bread for the World's government relations team.
The House and Senate are both in session beginning Wednesday of this week due to the Jewish holidays. They won’t stay in session long, though. It’s an election year, and members of Congress are eager to get home to campaign.
Programs that help people who are hungry and poor have been consistently under threat of devastating cuts during budget negotiations—whether that be the annual budget for the next year or a comprehensive deficit reduction bill that budgets for the next 10 years. New developments affecting those negotiations include a continuing resolution passed in the House, a new report from the administration outlining the effects of across-the-board budget cuts scheduled to begin in January, and the bipartisan negations being conducted by the Gang of Eight in the Senate.
Last week, the House passed a six-month continuing resolution (CR, temporarily funding government operations until a budget is passed) to fund federal discretionary programs at roughly current levels, plus a 0.6 percent increase for the first part of the 2013 fiscal year. The Senate is expected to vote on (and pass) the CR this week.
The farm bill—a bill which governs federal farm and food policy—is set to expire on September 30, 2012, and programs for two of Bread for the World's mini-campaigns, Supplemental Nutrition Assistance Program and International Food Aid, are authorized through the legislation. The Senate passed its version of the Farm Bill last June. However, with seemingly no chance of leadership allowing floor time for the House Committee on Agriculture farm bill, Iowa Democrat Bruce Braley filed what is called a discharge petition. If signed by a majority of the House (218 members), it would force the House to vote on the bill. The petition had 27 signatures as of Thursday afternoon.
Congress could still pass a farm bill extension before September 30 or they could let the bill expire and deal with an extension or re-authorization in the lame duck session in November/December once the outcome of the elections is clear.
On Friday, the administration released its sequestration report ($1.2 trillion in across-the-board spending cuts that are scheduled to begin in January and last nine years), detailing how automatic cuts would be implemented. The report, well over 300 pages, provides an estimate of the percentages and dollar amounts that would be cut from every discretionary and mandatory spending account at the program, project, and activity levels, as well as a list of accounts that are exempt from cuts. The negotiated CR does not alter the path of sequestration.
The bipartisan group of Senators called the Gang of Eight continues to meet, trying to develop a comprehensive, bipartisan deficit reduction agreement that would replace the sequester with a comprehensive plan for deficit reduction, including additional tax revenues and further spending cuts. If successful in reaching a deal that Congress enacts, their proposal could determine the available funding for programs for hungry and poor people for the next 10 years. Those involved in the Gang of Eight include Senators Warner (D-VA), Durbin (D-IL) , Conrad (D-ND), Bennet (D-CO), Chambliss (R-GA), Crapo (R-ID), Coburn (R-OK), and Johanns (R-NE).
In July, with the Circle of Protection partners, Bread for the World urged Barack Obama and Mitt Romney to answer one question: what about hungry and poor people? Last week, their video responses were released. Now it's time to ask the same question of our members of Congress and others running for office during this election season.
The U.S. Census Bureau released its most recent poverty figures last week, and one thing was clear: the safety net is critical during these tough economic times. The official Census Bureau poverty numbers do not account for programs such as the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) and the Earned Income Tax Credit (EITC), which help dramatically reduce poverty. If the data accounted for SNAP, it would show that 3.9 million fewer people would have been in poverty in 2011, and if it accounted for the EITC, then 5.7 million fewer people would have been in poverty, including 3.1 million children.
During the lame duck session of Congress our elected officials will be making tough choices about the budget. They can choose to protect programs vital to poor and hungry people or they can choose to drastically cut funding to those programs that have kept food on millions of tables as so many Americans struggle to find adequate employment. They can choose to cut poverty-focused foreign assistance, which would cost lives, or save lives abroad with an investment of less than one percent of the federal budget. We can influence the right choices. We must maintain the integrity of SNAP, Special Supplemental Nutrition Program for Women, Infants and Children (WIC), tax credits for low-income families, funding for food aid, and poverty focused development aid.
Please join Bread’s expert organizing and policy staff on Tuesday, September 18, as we discuss why this year’s elections are so important and talk about our different tools for engaging your elected officials.
Maryland activists participate in Bread for the World's 2011 Lobby Day. (Photo by Jim Stipe/Bread for the World)
- Develop an “elevator speech” for why ending hunger is important to you as a Christian.
- Register to vote.
- Write a letter to your local paper saying that ending hunger is a priority for you as a voter.
- Learn what the candidates are saying about ending hunger.
- Speak about the importance of ending hunger at candidates’ town hall meetings.
- Engage your friends. Make sure they are registered and know what the candidates are saying about ending hunger.
- Magnify your voice by combining it with those of thousands of other Christians. Become a member of Bread for the World; organize an Offering of Letters.
- Engage your church.
- Give money and volunteer time to candidates who are committed to ending hunger.
- VOTE for candidates who are committed to ending hunger.
During the August recess, as we lead up to the lame duck session, Bread members are setting up meetings with members of Congress and their staff at local offices to make sure that hunger issues are part of the campaign conversations.
by Amelia Kegan
On Wednesday, the House of Representatives voted on two competing tax proposals: H.R. 8 and H.R. 15. News accounts reported that H.R. 15 would extend tax cuts for those earning up to $250,000, and H.R. 8 would extend tax cuts for everyone. But that is not the whole story. The previous blog post explained how H.R. 8 continue tax cuts for everyone except low-income working families. Now let's look at the other bill.
H.R. 15 Extends Tax Cuts to Everyone
Contrary to some claims, H.R. 15 doesn’t just extend tax cuts for those earning under $250,000; it extends tax cuts for everyone. If you make more than $250,000, you still get to keep your tax cut on that first $250,000. You’ll have to pay a higher rate on the income earned over $250,000, but you still get that tax cut on the first $250,000—just like everyone else.
Tax cuts on people’s second $250,000 and third $250,000 add up. The amount of money that is not collected because of tax cuts on income above a quarter million dollars comes to $830 billion over ten years. What does $830 billion look like? If you spent $1 million every day from the day that Jesus was born, you would not have spent $830 billion.
$830 billion is over 550 billion meals under the SNAP program.
H.R. 15 also extends the low-income tax credits that H.R. 8 lets lapse. So it really does extend tax cuts for everyone, even low-income families.
by Amelia Kegan
On Wednesday, the House of Representatives voted on two competing tax proposals: H.R. 8 and H.R. 15. News accounts reported that H.R. 15 would extend tax cuts for those earning up to $250,000 and H.R. 8 would extend tax cuts for everyone. But that is not the whole story.
H.R. 8 Would Not Extend Tax Cuts for Everyone
H.R. 8 failed to extend critical tax credits for low-income working families—the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). These are the salient details about the bill:
- H.R. 8 eliminates EITC marriage-penalty relief.
- H.R. 8 prevents families from earning even $1 of the CTC until they make at least $13,000.
- H.R. 8 reduces EITC benefits for families with three or more kids.
Congress has made significant improvements to EITC and CTC, so H.R. 8 would harm millions of low-income working families in 2013 by allowing the improvements to expire. These will be some of the consequences if the bill passes:
- 8.9 million families, including 16.4 million children, would be harmed if earnings below $13,000 are no longer counted toward the tax credit.
- 3.7 million families, including 5.8 million children, would lose the Child Tax Credit entirely.
- 6.5 million families, including nearly 16 million children, would be hurt by the expiration of the EITC improvements.
Today I went to Capitol Hill to listen to Rev. David Beckmann and other Christian leaders urge the House of Representatives to defeat HR 8, a tax bill that would extend 2001 and 2008 tax cuts to wealthy Americans and reduce the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) benefit levels. Delivering a statement backed by nearly 60 prominent faith leaders, Rev. Beckmann, president of Bread for the World, prodded Congress to take a deeper look at the effects of cutting crucial tax credits that help the hungry and poor.
As Rev. Noel Castellanos of the Christian Community Development Association pointed out in his remarks, few of the families that rely on tax credits are present on the Hill to speak out against this House bill; therefore, others must speak for them.
Rev. Beckmann addressed the policy makers first by arguing that if the House bill goes through, there will be no tax incentive for couples to get married. He also addressed inequities in the tax system that places more of a burden on the poor. Rev. Beckmann reminded Congress that wealthy individuals should recognize that payment of taxes is a just action, quoting the Apostle Paul’s statement that government authorities are ministers of God.
Sister Simone Campbell of the prominent Nuns on the Bus movement preached that tax cuts for the rich have consistently hurt the bottom 20 percent of U.S. households. Contrary to the rhetoric behind those tax cuts, the benefits do not trickle down to the poor, she said. Sister Campbell insisted that our country needs to be a moral and united nation, supporting families that are hungry and poor.
Along the same lines, Rev. Michael Livingston of the National Council of Churches said he prays that Congress get a conscience and finds a heart. “How can Congress extend tax cuts to millionaires and cut programs like SNAP to poor and hungry families?” asked Livingston.
Rev. Jim Wallis of Sojourners stated that this Republican budget is an immoral document, and that for Catholic lawmakers it is a direct offense to Catholic social teaching.
Bread for the World hopes that Congress continues to create a circle of protection around poor and hungry people in today’s House vote by upholding the current EITC and CTC benefit levels. We must pressure Congress to stop protecting the top 2 percent.
And we need to love our neighbor as we love ourselves.
Photo courtesy © Royalty-Free/Corbis
As a husband and father of four, I want to provide for my family—on my own. I am striving toward this end and believe I will get there. At the same time, we have received countless blessings along the way, from a wedding check we found hidden in Frugal Living for Dummies six months after our honeymoon to interest-free car loans and mortgage down payment assistance from generous parents. And those are just two drops in the well.
At times we have written these blessings in a journal. Always, we try to notice and to thank God for them. It is in this same grateful spirit that my wife and I anticipate the blessing of the Earned Income Tax Credit and Child Tax Credit as the tax documents begin hitting our mailbox in January.
We live frugally and have made decisions to cut unnecessary expenses. I see the dollars slip out of our air-conditioned home when the front door is left ajar. On the train last week, some fellow commuters were bewildered when I told them we do not receive any television channels. We use coupons and shop at our local Aldi and wholesaler. Our mortgage payment is less than what most families pay for rent.
Some people (like my young children) just don’t seem to care as much about pinching pennies as I do! These means of stretching our dollars—which I happen to enjoy and my wife tolerates—are also a blessing.
And yet, as frugally as we live and as greatly as we have been blessed, we still struggle to make ends meet. The Earned Income Tax Credit and the Child Tax Credit help keep our family afloat financially. It is difficult for me to imagine how families carry on with less.
Thank you, faithful God, for providing for us. And I will continue doing what I can to protect my family and the many families that need these credits even more—much more—than we do.
+ Find out more about the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC)—and what you can do to help keep it in the budget.
Zach Schmidt is the Central Midwest field organizer at Bread for the World.
Get updates on issues and actions to take on behalf of hungry people.