Washington (June 4, 2003) -- The accelerated refund of the child tax credit to low-income families, dropped from the just-passed tax relief law, is being revived in separate proposals by Sen. Chuck Grassley, chairman of the Committee on Finance, and Sens. Blanche Lincoln, D-Ark., and Olympia J. Snowe, R-Maine.

Under the Lincoln-Snowe proposal, families with income between $10,500 and $26,625 would receive the credit in the form of the $400 per child checks to be mailed in July. The bill has 25 cosponsors, including three Republicans.

Grassley's proposal, in addition to accelerating the refundability of the child tax credit for lower income parents, includes a uniform definition of a child and making permanent the child tax credit.

"Some of us in Congress wanted more family tax relief in this package than what we ultimately passed," said Grassley. "We wanted to build on the family tax relief we passed in 2001. But House negotiators didn't want any offsets, so we had to drop a lot from the bill."

"Senator Grassley's bill to increase refundability of the child tax credit to allow more lower-income wage earners to benefit from the just-enacted $400 increase in the credit is more expensive than the similar bill introduced by Senator Lincoln," said Jim Seidel, senior tax analyst at RIA.

"Grassley's bill also is without revenue offsets, meaning that it would need 60 votes to pass the Senate," he said. "The cost of Lincoln's bill is fully offset with revenue raising provisions including tax-shelter crackdowns and anti-Enron provisions that were in the recent Senate-passed version of the Jobs and Growth bill but jettisoned in Conference. Therefore, it might be able to be passed under reconciliation provisions that would allow it to clear the Senate on a majority vote."

"Which version is more likely to succeed now seems to be mostly a matter of politics, and how Republican leaders in the House of Representatives decide to play it. They might favor a "clean" bill so that they can save the revenue offsets as sweeteners to help pass additional tax legislation that might not have as much support as these new child credit refundability provisions. In that case, Senator Grassley's bill might be left somewhat orphaned. The situation for now is pretty fluid, however, and it may take a week or so to crystalize."

-- Roger Russell

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