The bill was passed with a vote of 282 to 144 with 64 Democrats voting in favor of the plan. “Under this plan, a family of four would get an additional $1,000 in tax relief to spend or save however they wish; for new clothes, college savings, or a host of other items in a family budget,” said Chairman of the House Committee on Ways and Means congressman Bill Thomas of California. With economy beginning to slow down, it needs a hand to wind it up and more money in the pocket of consumers can be the right stimulus.
The bill increases the standard deduction for married couples filing jointly equaling it to twice the standard deduction for single filers. In addition it also expands the lowest present tax bracket (15%) to twice that of the corresponding bracket for single filers.
Looking out for low income working families, the bill ups the Earned Income Credit (EIC), making more couples qualify for EIC assistance. The bill also eliminates the current-law provisions that offset the refundable child credit and the earned income credit by the amount of the alternative minimum tax.
The bill doubles the child credit from $500 to $1000 by 2006, increasing the credit to $600 retroactive to this year. The bill would also make the child credit fully exempt from the alternative minimum tax.
When coupled with the Economic Growth and Tax Relief Act passed on March 8th, the expanded child credit would provide an average family of four up to an additional $560 in tax relief for 2001 ($360 from marginal rate cuts plus $200 from an additional $100 per child tax credit in 2001).