Delay Possible In Earned Income Tax Credit Payments
September 30, 1999
In order to pay for their spending plans without raiding Social Security, congressional Republicans have devised a plan to delay the refundable Earned Income Tax Credit (EITC) received by millions of working-class families, according to observers. Critics say it would hurt people on the lower rungs of the economic ladder
- Congress is scheduled to spend $7.6 billion in surplus contributions to Social Security to run the government in the 2000 fiscal year, which starts Friday.
- But because under the new plan about $8 billion won't be spent in FY 2000, Republicans show a $400 million surplus -- not a $7.6 billion hit on Social Security.
- According to the Congressional Budget Office, the bill could be much higher: Republicans are actually on course to spend $17.9 billion out of Social Security.
Republicans say the only way to avoid raiding Social Security is to distribute the EITC in 12 monthly payments next year rather than the normal lump sum paid to qualifying low-income working families after tax returns are filed. Because the fiscal year ends September 30, the last three payments in 2000 would count against the FY 2001 budget.
- About 20 million Americans in households earning from $10,200 to $30,580 are eligible for the EITC.
- They received $28.5 billion last year, with the average family receiving $1,890 -- allowing some to pay debts, make a down payment on a car or pay tuition.
Critics say that under the plan the same family would receive a monthly check of $157.50, better suited for paying bills. Gene Sperling, director of the White House's National Economic Council, says the plan is "a forced interest-free loan to the government" from "people scraping to get by."
Source: Tim Weiner, "G.O.P. Would Delay Poor's Tax Credit," New York Times, September 30, 1999.
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