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Washington D.C. – Today, a new analysis reveals that the House Budget Resolution, introduced last week by Chairman Paul Ryan (R-WI), poses serious threats to several tax credits established to provide significant tax relief and additional cash support for low-income working families.
While the Ryan Budget does not specifically mention what will happen to tax provisions currently serving families with children, the analysis cautions that there is reason for serious concern. Two key child-friendly tax provisions, the Earned Income Tax Credit and the Child Tax Credit, have refundable portions, meaning that if a family’s tax liability has already been reduced to zero, they are still eligible to be “refunded” the remaining portion of the credit. However, because the refundable portions of these credits are considered tax expenditures, their fate is tied to spending levels within the budget, an area Chairman Ryan targets for significant reduction.
Bruce Lesley, president of First Focus, a bipartisan child advocacy organization, released the following statement:
“The House Budget Committee proposal places children at enormous risk in the name of deficit reduction. The annual spending caps proposed in the Ryan budget would produce a sharp decrease in income security spending and threaten the future of vital tax provisions currently serving low-income children and their families, including the Earned Income Tax Credit and the Child Tax Credit. For example, if the Ryan proposal results in the loss of current levels of refundability for the Child Tax Credit, over 18 million children nationwide could see their credit reduced or eliminated.
“Even through the recession, these tax provisions have demonstrated success in protecting the economic security of children. In 2009 alone, the Earned Income Tax Credit lifted 3.3 million children out of poverty. Moreover, without the credit, it is estimated that the child poverty rate would have been one-third higher.
“While these drastic spending cuts were proposed in the name of deficit reduction, they would not even make a dent in our nation’s deficit. The Ryan Budget couples $4.3 trillion in spending cuts with tax changes to benefit the wealthiest Americans and corporations, resulting in $4.2 trillion in lost government revenue. A recent analysis from the Center for Budget and Policy Priorities has found that as a result, only $155 billion would be put towards deficit reduction over the next 10 years.
“$155 billion over 10 years in deficit reduction pales in comparison to $5 trillion over 10 years in costs – which, at $500 billion per year, is the estimated cost of child poverty in terms of economic loss to the United States from the combined effects of low education and earning potential, poor health outcomes, and incarceration rates of children who grow up poor.
“Rather than guarantee economic success for our nation’s children, the Ryan Budget presents a real threat – both now and in the future – to programs and policies that have proven successful for our nation’s children. Instead of placing children directly in harm’s way, we urge our nation’s leaders to protect children from harm as they work to find a solution to our budget challenges.”