Citizens for Tax Justice For release on June 24, 1997

Tax Plans' $500 Kids Credits Exclude Half of All Children

Impact of Excluding Families with Too Little or Too Much Income Varies Widely by State

Tax plans pending in the House and Senate that ostensibly offer a $500 per child tax credit as an aid to hard-pressed families with children would actually provide no credit at all for as many as 40 million of the nation's 80 million dependent children. In addition, as many as 8 million children would be eligible for only partial credits.

The primary factor in excluding children from the proposed $500 tax credit is a provision in both bills that denies the credit for children in moderate- and low-income families. In addition, the plans also limit the credit to children up to age 16 and phase out the credit at high income levels.

As a result of these restrictions, nationwide, 47% of all dependent children would be completely ineligible for the $500 child credit under the Senate tax plan, and half would be ineligible under the even more restrictive House plan. Less than 7% of the 23 million children whose parents earn less than $23,000 would be eligible for any credit under the Senate plan, and only 4% of these children would be eligible for any credit under the House plan.

State-by-State Child Credit Figures:

Under the Senate plan, more than half of all children would be completely ineligible for the child credit in eight states. These include: Mississippi, home state of Senate Majority Leader Trent Lott, where 59% of all children would be ineligible, President Clinton's home state of Arkansas (55% ineligible), Louisiana (54%), Alabama (54%), New York (53%), California (53%), West Virginia (53%), and Texas (51%). In Delaware, home state of Senate Finance Committee Chairman Bill Roth, chief author of the Senate tax plan, 47% of all children would be ineligible for the credit.

Under the even more restrictive House plan, more than half of all children in 15 states would be completely ineligible for the $500 credit. These include Mississippi (63% ineligible), Alabama (58%), Louisiana (58%), Arkansas (58%), California (56%), West Virginia (56%), New York (56%), South Carolina (54%), Ways and Means Chairman Bill Archer, Senate Majority Leader Dick Armey and Senate Whip Tom Delay's home state of Texas (54%), Tennessee (53%), Florida (52%), New Mexico (52%), House Speaker Newt Gingrich's home state of Georgia (52%), Oklahoma (52%), and North Carolina (51%).

In only 8 states would more than three-fifths of all children be eligible for a full or partial tax credit under the Senate plan. That falls to only 4 states under the House plan.

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