The $350-billion tax cut signed by President Bush on Wednesday has a little something for everyone - unless you are one of the millions of low-income American families that had been hoping for some relief.
Somehow, the extra $400-per-child tax credit will apply to almost everyone but the working poor. Their tax credit landed on the cutting-room floor of the House-Senate conference. It is hard to imagine a more heartless outcome. The new law that will put tens of thousands of dollars into the pockets of the nation's millionaires offers next to nothing for those just scraping by.
The per-child tax credit, which was raised from $600 to $1,000 under the new law, was designed primarily for the benefit of middle- and lower-income taxpayers. It phases out for those with very high incomes, and has never been available to the poorest wage earners - those making less than $10,500 a year - because they earn too little to pay any federal income taxes. But special rules have always been in place to give those making more than $10,500 access to the tax credit. It is these taxpayers whose interests have been disregarded by Republican leaders in Washington. Most families earning between $10,500 and $26,625 will receive no additional tax credit for their children.
Low-income taxpayers lost their tax credit while House-Senate conferees were adjusting the tax cut package to keep it within the $350-billion limit demanded by the Senate. Apparently, the cuts on dividend income and capital gains, money that would flow disproportionately to the richest Americans, were sacrosanct.
President Bush and Republican leaders in Congress typically deride as "class warfare" any criticism of their tax and budget policies that unfairly favor the wealthy at the expense of working-class Americans. Yet this indefensibly callous legislation is a genuine example of class warfare - and lower-income workers suffer all of the collateral damage.