House Budget Chairman Paul Ryan, speaking at a dinner several weeks ago honoring the life of Jack Kemp, spoke eloquently about poverty and opportunity:
We need a vision for bringing opportunity into every life — one that promotes strong families, secure livelihoods, and an equal chance for every American to fulfill their highest aspirations for themselves and for their children. . . .
It calls for a stronger safety net — one that protects the most vulnerable and promotes self-reliance. . . .
But, in the first significant policy action since the Ryan speech, House Republicans have advanced a budget plan (Speaker Boehner’s “Plan B”) that would push millions of working parents and their children into — or deeper into — poverty by failing to extend tax-credit improvements for low-income working families. At the same time, Plan B would extend a lucrative tax cut for heirs of the nation’s wealthiest estates.
Two of our most effective weapons against poverty, the Earned Income Tax Credit and refundable Child Tax Credit encourage and reward the hard work of millions of low-income families across the country. Improvements in the credits enacted in 2009 and 2010 lifted 1.5 million Americans in low-income working families — including 800,000 children — out of poverty in 2011, Census data show, while lessening the depth of poverty of 15.2 million other people.
Plan B would let those improvements expire at the end of the month. Seven million children in working families earning less than about $13,000 would lose the child credit entirely, while an additional 10 million children in working families with earnings somewhat above $13,000 would have their child credit cut, in many cases by very large amounts, according to the Urban-Brookings Tax Policy Center.
For example, a single mother with two children working full-time, year-round at the minimum wage of $7.25 an hour — and earning $14,500 per year — would see her child credit plummet from $1,725 to just $165.
In contrast, Plan B’s extension of a 2010 cut in the estate tax would give the heirs of the largest 3 in 1,000 estates in the country tax cuts averaging more than $1 million apiece, compared to the President’s proposal to return the estate tax to its 2009 rules. The 2009 rules are more than generous: a wealthy couple could bequeath $7 million entirely tax-free.
Letting tax-credit improvements for working families expire while extending a tax cut for the nation’s highest-income people is not the way to fight poverty and promote opportunity.