Democratic Tax Credit Bill Aids Poor,
Cuts Corporate Breaks
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[March 27, 2014]
WASHINGTON (Reuters) — Democratic
U.S. Senator Patty Murray on Wednesday introduced legislation to expand
a tax credit for the working poor as requested by President Barack
Obama, proposing to pay for it by closing two tax breaks that aid
With Senate Democrats not pursuing a traditional budget resolution
this year, the targeted measure aims to help them draw fiscal
contrasts with Republicans, who will consider their own budget plan
Democrats see reducing income inequality as their core issue for
November's congressional elections.
Murray's bill would increase the maximum Earned Income Tax Credit
for childless workers to about $1,400 from $487 currently and reduce
the childless worker eligibility age for the credit from 25 to 21.
It also would create a new tax deduction for low-to-middle income
families with two incomes and at least one child, allowing a 20
percent deduction on the secondary earner's income. This would also
help increase EITC benefits by reducing earned income for purposes
of calculating the credit.
It is not clear whether Senate Majority Leader Harry Reid will move
quickly to bring the measure to a Senate vote. A spokesman for Reid
said no action had yet been scheduled.
Murray, the Senate Budget Committee chairwoman and a member of
Senate Democratic leadership, said the bill would complement
Democrats' efforts to raise the minimum wage to $10.10 an hour from
a $7.25 federal minimum.
"Struggling families face a lot of challenges to getting ahead
today. The very least we can do is keep our tax code from forcing
families to take a half-step back for every step forward," she said
in remarks on the Senate floor.
The measure, dubbed the "21st Century Worker Tax Cut Act" contains
provisions similar to those in Obama's fiscal 2015 budget request
released earlier this month. But it has little chance of passage in
the House of Representatives, where Republicans who control the
chamber want to keep all revenues from the closures of tax loopholes
and other breaks to help lower tax rates as part of comprehensive
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The expanded low income tax credits in Murray's bill would cost
$144.9 billion over 10 years, which would be paid for by closing
widely criticized tax breaks for corporations and executives.
These include subjecting stock options paid to executives to a $1
million annual cash compensation limit per employee for corporate
tax deductions. Companies can now claim larger deductions by paying
executives in stock options that do not fall under the cash
The measure also would make changes aimed at deterring companies
from shifting U.S. profits to offshore tax haven countries such as
Bermuda and the Cayman Islands. It would subject such profits to an
effective tax rate of 15 percent unless they were derived from
legitimate business operations in a foreign country.
(Reporting by David Lawder)
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