A war on poverty

September 25, 1995|By Clarence Page

Washington -- Washington's war on the poor and powerless proceeded apace.

Is that too harsh? You be the judge.

Take a look at some of the programs Congress has put on the chopping block while most of the nation's attention has been diverted by debates over Medicare, bilingual education, immigration, school prayer and flag burning.

Take a look at two of the popular programs conservative Republicans have targeted for elimination: the Earned Income Tax Credit and the Low Income Housing Tax Credit.

Few Americans walk around with the words ''Earned Income Tax Credit'' on the tips of their tongues, yet about 35 percent of all Americans benefit from this tax break because of low income.

It provides a tax credit of 7 cents to 40 cents on every dollar earned for those who have a low enough income to qualify.

A bipartisan program

Both liberals and supply-side conservatives like the program, which is designed to give incentives for adults with children to work instead of relying on welfare.

Under the 1996 benefit schedule, the credit would lift about 4.5 million Americans above the poverty line, according to the Washington-based Urban Institute.

Republican congressional leaders have proposed a child tax credit to make up the difference. But under Republican proposals to reduce the EITC, expand Individual Retirement Accounts and enact a $500 child tax credit, millions of low-income families would pay more taxes, many upper-income earners would pay less and the income gap between rich and poor children would grow, according to an analysis by the Center on Budget and Policy Priorities.

Sen. Don Nickles, R-Okla., noted in introducing the bill that it differed from the House version only in one respect: The tax credit would not be limited to families with incomes of less than $250,000.

As a result, the poorest 40 percent of American children, most of whom live in families that are not on welfare, would receive only 3.4 percent of the benefit from the credit and the poorest third of children -- who number 24 million -- would receive no credit at all, according to Robert Greenstein, the center's director and head of President Carter's poverty programs.

But the tinkering with the EITC is modest compared to the execution conservative Republicans are trying to schedule for the Low Income Housing Tax Credit.

Since it began in 1987,the program has provided a tax incentive for bankers and builders to build something other than high-priced condominiums and town houses for high-income yuppies.

Last year, the tax credit was responsible for more than 90 percent of the new low-to-moderate income housing built. It produced an estimated $12 billion in private investment, including 114,000 units in 1994.

Instead of reducing the deficit, critics of the housing tax credit want to channel its funds to research and development subsidies for private corporations.

Is this the sort of ''corporate welfare'' that Colin Powell has been talking about lately?

Clarence Page is a columnist for the Chicago Tribune.

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