What Happened to "No Child Left Behind?" 12 Million Have Been Left Behind!

May 30, 2003

By Erin Bradrick, NOW Government Relations Intern

Shortly before signing the Jobs and Growth Reconciliation Tax Act of 2003 (H.R. 1054, H.R. 2) into law, George W. Bush stated, "It is good for American workers, it is good for American families, it is good for American investors and it's good for American entrepreneurs." Despite his claims, just how good is the $350 billion tax cut plan for American families? While households making over $1 million a year will receive an average tax cut of $93,500, 53 percent of American families will receive $100 or less in refunds and 36 percent of households will not receive any tax cut at all.

In addition, a last-minute conference revision will deny millions of minimum wage families the $400 child tax credit increase. NOW Action Vice President Olga Vives described the deletion of the child credit provision "as just one more indication of how little Congressional leaders and the administration cares for low income working families and their needs."

Before Bush signed the new tax cut law on May 28, low-income families received a refund of $600 per child or 10 percent of their income in excess of $10,500, whichever was lower. The new tax plan increases the credit to $1,000 per child, but makes no increase in the percent of income refund. Low-income households will still only receive a maximum of 10 percent of their income over $10,500, which may be well below $1,000 per child. The bottom line is that many low-income families won't benefit from the $400 per child increase—and many will not even receive the full previous $600 credit.

The Senate-passed tax bill included a refundability increase from 10 percent to 15 percent of a household’s earnings above $10,500. This acceleration would have allowed low-income families to benefit from the $400 tax credit increase in the law. However, the Senate and House conference agreement dropped this provision at the last minute, before sending it to the president for signing. Nearly twelve million children, or one in six children under the age of 17, would have benefited from the child credit refundability increase. Under the bill signed into law, many of these children will not receive any tax benefit at all. Twelve million children have been left behind.

Total Cost of Tax Cut May Exceed $1 Trillion

Not only does the new tax cut law deny child tax credit refunds to those low-income families and children most in need of them, but it is also likely to be highly inefficient in boosting the economy in the near future. A vast majority of the approved tax cuts will go to higher-income households, which are much more likely than middle or low-income households to save the money rather than spend it. In addition, the new tax law irresponsibly masks the total cost of the tax cut. Its overall cost could far exceed the Administration's proposed plan, reaching between $800 billion and $1 trillion by 2013. The bill signed into law provides $350 billion in tax cuts over the next two years, but contains many extendable provisions that could increase its overall cost.

Even though the $350 billion is far lower than the more than $700 billion originally pushed by the administration, it still poses serious questions about the government's ability to fund necessary programs in the near future and whether the cuts will stimulate economic growth. This is not the last of the tax cut proposals to be expected from the right wing, anti-government political leadership—their goal is to bleed the government dry, pare back all government spending to support mainly defense and corporate welfare programs and let the market hold sway.