White House Puts Human Face on Child Tax-Credit Debate

By contrast, Clinton's plan would provide the children's tax credit to families who paid either income or payroll taxes. Under his plan, families could receive the children's credit in the form of a refund check if they owed income taxes--and their tax liability would be calculated before factoring in the earned income tax credit--or if they paid more in payroll taxes than they received under the earned income tax credit. That approach would mean a family of four would begin receiving a partial benefit when its annual income hit $17,500, and the full benefit of the credit at $22,405, according to the Center on Budget and Policy Priorities.

Falling between these alternatives, the Senate bill would provide the children's tax credit to families who still owed income tax after half of their earned income credit was subtracted.

Overall, Clinton's plan would provide tax breaks to 6 million more children in working poor families than the House bill and 4 million more than in the Senate bill, the center calculated.

"The families in dispute between the Clinton bill and the Republican bills are all working families, nearly all of whom owe a significant amount of federal taxes once payroll taxes are considered," said Isaac Shapiro, a senior fellow at the center.

To Democrats, this is an argument of simple equity. As Sen. John F. Kerry (D-Mass.) put it during Senate debate, the tax credit should be available to "every family in America that works [and] is struggling to raise their children."

Democrats point out that the tax proposal in the GOP's 1994 "contract with America" allowed families who owed payroll taxes, but not income taxes, to benefit from the credit. And they argue that the GOP could afford to provide more benefits to families at the lower end of the income spectrum if it trimmed its assistance to those at the upper end. While Clinton would deny the children's credit to families earning above $75,000, for example, the House and Senate bills both provide it to families earning up to $110,000.

Republicans counter that their "contract" proposal was more generous to the working poor because it called for a far bigger tax cut--some $200 billion over five years--than the $85 billion cut Clinton has agreed to.

"The limited size of this tax package requires you to make choices," said Ari Fleischer, spokesman for the Ways and Means Committee.

Credit Designed to Win Middle Class

GOP strategists are clearly calculating that the political benefits of allying themselves with middle-class taxpayers outweighs the political risks of alienating these low-income working families. "The swing voters are middle-class voters who are tired of having their taxes raised," Fleischer said.

But it is these less affluent working-class voters--especially whites--who have been among the most unstable elements of the electorate in the last few elections. They moved sharply toward Republican congressional candidates in 1994, helping the GOP recapture the House, but they drifted back toward congressional Democrats in 1996 and backed Bill Clinton over Bob Dole in the presidential race.

"The party that can figure out how to tell a convincing story to these people . . . is the party that's going to dominate," said Ruy Teixeira, a public opinion analyst at the Economic Policy Institute.