Refundable Child Tax Credit Passes Congress

The otherwise thoroughly regressive tax legislation passed by Congress May 28th includes a significant silver lining – a partially refundable child credit for low-income families. For three months, grassroots members of the National Campaign for Jobs and Income Support, a special project of the Center for Community Change, along with the Children’s Defense Fund, the US Catholic Conference, the Food Research and Action Center, NOW-LDEF, and the National Council of La Raza, have been working hard for this change.

The final tax bill includes a version of the Campaign’s proposal that will make the credit refundable for families earning more than $10,000 per year, meaning that many low-income families with children will get a refund check back from the IRS, even if they don’t owe any taxes. The program costs about $8 billion per year, and amounts to the largest anti-poverty program created since the early 1990s expansion of the Earned Income Tax Credit. The provision helps about 17 million children who would have received nothing under the President’s proposal – and will lift 500,000 children above the poverty line.

The refundable child credit adopted by Congress:

• Increases in value from $500 per child to $1000 per child in four steps over the next 10 years.

• Is partially refundable for families with earnings over $10,000 per year (indexed to inflation beginning in 2002). A family with one child earning $17,000 or more would get the maximum $1,000.

• Will not be considered “income” for purposes of determining eligibility under any federal or state benefits program.

• Becomes effective in calendar year 2001 (so eligible families may claim a refund when they file 2001 taxes next year).

At the beginning of this effort, few believed that it would be possible to win major anti-poverty legislation in the current political climate. And in fact, advocates did not succeed in persuading the Congress to adopt their proposal for refundability for all families: Congress denied families with earnings under $10,000 any benefit of the child credit. The inaugural effort of the National Campaign, however, shows that sustained grassroots pressure can result in major policy changes even in a hostile political environment.

Contact: Ruth Cohen, National Campaign for Jobs and Income Support, 202-342-0567 or

Shelterforce is the only independent, non-academic publication covering the worlds of community development, affordable housing, and neighborhood stabilization.


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