Inequality in the Wake of Katrina: A Debate on Bush's Child Tax Credit

The images broadcast all over the world in the days after the Hurricane Katrina disaster forced some politicians to admit that poverty and endemic racial discrimination were still major problems in the United States.

As criticism about the government's slow response to the disaster mounted, President Bush gave a televised address where he promised to address racial inequality and implement plans to help the poor. And Congress is now considering various plans to give relief to the victims of the disaster including an expansion of the Child Tax Credit which first passed in 1997. The credit is an actual reduction in taxes as opposed to just a deduction in taxable income. It allows families to reduce the federal income tax they owe by up to $500 dollars per child per year. In 2001, President Bush extended the credit to $1,000 dollars and made it partly available to families too poor to have income tax bills. The credit phases out at incomes above $110,000 dollars and below $11,000 meaning the wealthiest and the poorest families receive nothing.

Bush has touted the child tax credit as proof that the steep tax cuts he's implemented since he's been in office don't just benefit the wealthy but are good for low-income families as well. But a new study by the non-partisan Tax Policy Center shows that the program does not benefit almost half of African-American and Latino children. And it turns out that the children who see the least benefit from the credit are in Mississippi and Louisiana.

* David Harris, President of the Children's Research and Education Institute.
* Dan Mitchell, Senior Fellow in Political Economy at the Heritage Foundation.

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