As Congress prepares to vote this week, perhaps even today, on a $1.1 trillion spending plan, it is debating whether to extend or make permanent a variety of expiring business and individual tax breaks. Yet, some of the tax breaks in the package would be better described as corporate giveaways.
For example one tax break, estimated to cost $11 million, would allow NASCAR track owners and other proprietors of “motorsport entertainment complexes” to write off the cost of facilities on their taxes over seven years instead of the standard 39 years for non-residential properties. Another worth $245 million would allow TV and filmmakers the option of deducting significant production costs. And then there is the “research and development” tax credit which benefits large corporations such as Microsoft, Boeing and United Technologies. Critics of this tax break, which would cost $80 billion over ten years, argue that its broad application amounts to rewarding companies for doing something they would have done anyway.
It’s hard to believe with more than 45 million Americans living in poverty, and not enough jobs for all the people who want and desperately need to work, that lawmakers in Washington are even considering tax breaks for the benefit of wealthy NASCAR racetrack big shots or powerful companies reaping huge profits.
But if Congress wants to permanently extend some tax breaks to businesses and profitable multi-national corporations, they most certainly should do the same for working poor families.
Tax credits lift people out of poverty
That’s the view of U.S. Senator Chuck Schumer (D-Manhattan), who earlier this week joined State Assembly Member Marcos Crespo (D-Bronx) along with several local and national anti-poverty advocates to call on Congress to take improvements to the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) that were enacted as part of the American Recovery and Reinvestment Act of 2009 and make them permanent
The EITC and CTC are credited with helping to lift 32 million Americans above or closer to the poverty line in 2013. These tax credits are critical to working families in New York. More than 2.8 million New York households took advantage of the tax credits in 2013. As a result, 597,000 New Yorkers, including 307,000 children, were lifted out of poverty each year from 2011 to 2013.
If these tax provisions are allowed to expire 755,000 New York families, with more than one million children, stand to lose a total of $809 million in tax credits.
What does that mean?
It means a single-mother with two children working full-time and earning about $14,600 annually would see her Child Tax Credit drop from $1,725 to zero. Vulnerable families on the verge of poverty cannot afford to lose these credits. It’s the equivalent of abandoning them when they are trying their best to work, pay for necessities for themselves and their children, and climb out of poverty.
Expiration of tax credits disproportionately harm Latinos
Here in New York City, the expiration of the tax credits would disproportionately harm Latinos whose poverty rate of 29 percent is the highest of any ethnic group. Across the country, about five million Latino working families with nine million children are projected to lose an average of $1,000 each if the credits are not renewed.
Key provisions of the EITC and CTC are scheduled to expire in 2017. But the opportunity to negotiate permanent changes, and expand the EITC to provide greater benefits to younger workers and tax filers without children, is now. That’s because Congress is ready to cut a deal. New House Speaker Paul D. Ryan (R- Wisc.) has expressed support for expanding the EITC to include more childless workers. There is also bi-partisan support for expanding the existing Child Tax Credit.
Still, there is something fundamentally wrong with a spending and taxation agenda that conditions help for struggling Americans who are trying to stay out of poverty on giveaways to those who don’t need them. And while I agree with U.S. Representative Charlie Rangel (D-Manhattan) that the big tax breaks for businesses in this package far outweigh the tax credits for the working poor, in this political climate we simply cannot let an opportunity to help vulnerable families slip by.
Critical measures like the EITC and CTC boost economic opportunity and bring a revenue stream into communities that desperately need them. And when communities are strong, and we support families and children, we all benefit. Not just low-income families, but society as a whole.