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The Child Tax Credit After the Economic Growth and Tax Relief Reconciliation Act of 2001, January 30, 2003 1 (January 30, 2003)

handle is hein.tera/crstax0398 and id is 1 raw text is: Order Code RS20988 Updated January 30, 2003 CRS Report for Congress Received through the CRS Web The Child Tax Credit After the Economic Growth and Tax Relief Reconciliation Act of 2001 Gregg Esenwein Specialist in Public Finance Government and Finance Division Summary The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) increases the child tax credit from its prior law level of $500 to $1,000. This increase is phased in gradually over a 10-year period. The 2001 Act also makes the credit refundable for all families and changes how the refundability of the credit is calculated. Finally, the 2001 Act allows the child tax credit to be taken in full against both an individual's regular and alternative minimum tax. The EGTRRA tax cuts are scheduled to expire at the end of calendar year 2010. In the 107th Congress, the House passed several bills that would have extended the EGTRRA tax cuts beyond 2010. The Senate did not adopt these bills. It is likely that the 108th Congress will revisit the issue of making the EGTRRA tax cuts permanent. Additionally, in response to continued sluggish economic performance, President Bush unveiled a new tax stimulus plan in early January 2003. As part of his stimulus plan, President Bush has proposed accelerating the phase-in of some of the EGTRRA tax cut provisions. The President's proposal includes increasing the child tax credit to $1,000 effective in 2003. The Treasury Department estimates that the 10-year revenue cost of these change would be $91 billion. This report will be updated as legislation action warrants. Background The child tax credit was initially enacted as part of the Taxpayer Relief Act of 1997. Congress passed the credit because it believed that the tax structure did not adequately reflect a family's reduced ability to pay taxes as family size increased. The decline in the real value of the personal exemption over time was cited as evidence of the tax system's failure to reflect a family's ability-to-pay. Congress believed that the child tax credit Congressional Research Service ** The Library of Congress

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