and the mandates that the Federal Grovernment has apphed to the
States. That is what it has to do with, sir.
And while you increase the child support amounts, you should
also look at those laws. And you should also read title 33, sub-
section 4106(f), which states: When the Office of Child Support
has an enforcement in effect, they shall be guided by the best inter-
est of the child."
When the welfare and the Office of Child Support in each State
maintains those children below poverty level, when their
noncustodial parents are paying $400 to $500 a month in child sup-
port, then neither the State nor the Federal Government is adher-
ing to that Federal mandate.
Thank you very much.
Chairman Rangel. Ms. Casey, do you resent when the custodial
parent is on welfare, and the parent outside the home makes a con-
tribution to the child, that the State takes that money in part pay-
ment of the welfare payment that the taxpayers are giving to
Ms. Casey. Yes, sir, I do. I do because that child support is col-
lected on the basis of the "best interest of the child." I see that
Chairman Rangel. I just want to get your thinking.
Ms. Casey. Yes. May I
Chairman Rangel. Listen.
Ms. Casey. OK, I am sorry.
Chairman Rangel. I just want to make certain I understand
what you are saying.
Do you believe that the fact that the parent outside of the home
contriouted to that person being on welfare, that that person would
not have been on the public dole if that other person who left
would have been in the house?
I mean, I see that you are personally involved. You keep talking
about a stepchild. But the way I look at is that, if the husband,
just for the hypothetical, did not for good reasons or whatever rea-
sons leave his wife, she would not have been on welfare in the first
Ms. Casey. Sir, in most cases, I believe the national average is,
approximately 87 percent of all divorces and separations are initi-
ated by the female. Men are not deserting their families. Men do
not abandon their children. Men are being forced out of their
Chairman Rangel. Well, again, I am asking
Ms. Casey. I would just like to stipulate the point that I am try-
ing to make is: currently in the system, we have fathers who are
paying, and we need to recognize that we have fathers that are
paying. And we have to ask why they are paying. Is it simply be-
cause of a punitive risk that they may be taking if they do not pay,
or could it be they really care about tneir children?
Chairman Rangel. I am just saying that as the average tax-
payer, if somebody is on welfare and one of the parents is sending
in checks, I would want to see the taxpayer's money reimbursed.
Ms. Casey. I would want to see the taxpayers' money reimbursed
to the extent of the direct cost of the child. But we have cases, sir,
where the States, when they do not have a paternity case estab-
lished, when they do not know who the father is, the amount that
goes on the books as an account receivable in the name of child
support is the total household welfare grant.
That is unacceptable to me, because now we are saying that the
child is responsible for that custodial parent's inadequacies. That
custodial parent has a responsibility to themselves. Any money
that is collected on behalf of a welfare recipient child in excess of
the welfare amount directly related to that child should be en-
trusted for that child's later use. It should not be consumed by a
State and Federal welfare system.
Chairman Rangel. And how about for the housekeeping for the
mother, I mean, the fact that she is taking care of this guy's kid?
Ms. Casey. Sir, that is not going to housekeeping funds. Those
are going to reduce a deficit that is not going to be reduced. The
money is simply put back into the system. It is going to subsidize
When we retain the funds from a welfare recipient child support
check, we pass along $50. Let us use a hypothetical number of
$400. We have a household that is receiving $500 in welfare bene-
fits. There is a $400 child support check. Of that, $50 goes into the
household. The remaining $350 is retained by the State and Fed-
That money is then reintroduced into the system. It is introduced
into the system as support for the Office of Child Support program.
That is wrong, sir. That money was meant to take that child out
of poverty. That is not taking the child out of poverty.
Chairman Rangel. How many people are in your organization;
do you know?
Ms. Casey. No, sir, I do not know.
Chairman Rangel. Is it a Vermont organization? Is it Vermont?
Ms. Casey. In Vermont?
Chairman Rangel. Or is it national?
Ms. Casey. No, it is simply a Vermont, New England — Vermont,
New York organization, sir.
Chairman Rangel. Are there people from New York?
Ms. Casey. Excuse me?
Chairman Rangel. Do you have a branch in New York?
Ms. Casey. I am the branch in New York. I am affiliated also
with Parents Without Parents in New York. I travel to Vermont on
a daily basis for work, and that is where the organization is based.
Chairman Rangel. And you have a national office as well?
Ms. Casey. Vermonters for Stronger Families is limited to the
Vermont area, sir. The Children's Rights Council is national with
1,500 members and 13,000 affiliates.
Chairman Rangel. And you are a New Yorker?
Ms. Casey. I am a New Yorker, sir, upstate New York. I live
right next to Lake Champlain.
Chairman Rangel. Well, we will teach them. If there is another
way to do it, we will think of a way to do it. And you bring an ex-
citing, different view to this committee.
Ms. Casey. Thank you very much.
Chairman Rangel. Let me thank this panel. I will be working
with you, Mr. Sullivan and Mr. Brabham. It makes us feel good to
see that a lot of people who would never really get a good chance
in life, that we are doing something to help this out, and I want
to thank you, too, Mr. Holt.
Mr. Holt. Thank you.
Chairman Rangel. OK Our last panel — and we apologize for the
delay in time, but we had no way of knowing our legislative cal-
endar — from the military, retired, Sgt. Maj. Michael Ouellette from
the Military Coalition, he is the cochair; Nancy Kennedy, the chief
of staff of the United Way of America; Roger Glunt, president of
Glunt Building Co., representing the National Association of Home
Builders; and Crystal Harrison, production line employee with
Hewlett-Packard from Spokane, representing the section 127 Coali-
By unanimous consent, the testimony of all of the witnesses here
will be entered into the record, and you should feel free to highlight
And Sergeant Major Ouellette, who is coming to the table now,
if you are prepared to start off, we will listen to you. Sergeant
STATEMENT OF SGT. MAJ. MICHAEL F. OUELLETTE, U.S. ARMY
(RETIRED), COCHAIRMAN, THE MILITARY COALITION; AND
DEPUTY DIRECTOR OF LEGISLATIVE AFFAIRS, NON COM-
MISSIONED OFFICERS ASSOCIATION; AND ALSO ON BEHALF
OF MS. SYDNEY TALLEY HICKEY, NATIONAL MILITARY FAM-
Sergeant Major Ouellette. Thank you, Mr. Chairman.
Mr. Chairman, on behalf of Ms. Sidney Tally Hickey, the associ-
ate director of government relations for the National Military Fam-
ily Association, and the Non Commissioned Officers Association, I
wish to thank you for the opportunity to present testimony this
Incidentally, the statement submitted has received the endorse-
ment of The Military Coalition, comprised of 24 military organiza-
tions with a 3.5 million member representation base of which I am
privileged to currently serve as the cochair.
Mr. Chairman, in the interest of time, I will be very brief, in that
this morning Representative Slattery came before you and dis-
cussed his introduction of H.R. 479. The Military Coalition, simply
in the interest of time this afternoon, strongly endorses that legis-
lation and the possibility that these subcommittees would consider
expanding EITC eligibility to those qualified and eligible service
members serving overseas.
Mr. Chairman, that concludes my remarks. Thank you very
[The prepared statement and attachment follow:]
STATEMENT OF SGT. MAJ. MICHAEL F. OUELLETTE
Deputy Director of Legislative Affairs
Non Commissioned Ofiicers Association
Mr. Chairman. I am Retired Army Sergeant Major Michael F. Ouellette, Deputy
Director of Legislative Affairs for the Non Commissioned Officers Association of the United
States of America (NCOA) and Co-Chairman of The Military Coalition. The Association is a
congressionally-chartered organization with a membership in excess of 160,000
noncommissioned and petty officers serving in every component of the five (5) Anned Forces
of the United State; active, national guard, reserve, and retired; and veterans. The testimony
presented today was prepared by NCOA and The National Military Family Association
(NMFA)on behalf of The Military Coalition. The National Military Family Association
(NMFA) is a volunteer, non profit organization composed of members from the seven
uniformed services, active duty, retired, and reserve, and their family members and survivors.
NMFA's sole focus is the military family and its goals are to infiuence the development and
implementation of policies which will improve the lives of those families. NCOA and NMFA
appreciate this opportunity to express their views. The Military Coalition represents 24
military associations with approximately 3.5 million members. A list of member
organizations is attached.
In 1975 the Earned Income Tax Credit (EIC) was enacted to provide relief from the
Social Security payroll tax for employed low income tax-payers with children. For seventeen
years, young military families serving overseas by order of the U.S. Government have been
prohibited from benefiting from this tax relief, simply because of location. These young
families, who qualify in every other way for the EIC reside overseas with more senior service
families whose income is sufficient to incur a U.S. tax liability. No tax relief is accorded
eligible military families stationed overseas. NCOA, NMFA and other military associations
have pursued a correction to this inequity since enactment of the original Earned Income
Credit in 1975. Both NCOA and NMFA strongly supported legislation introduced by
Representative Jim Slattery (D-KS 2nd District) in the 101st and 102nd Congress that would
have extended the EIC to military families overseas. We were grateful when the provision
was included in the House version of the Omnibus Reconciliation Act of 1990 and extremely
disappointed when it did not survive in conference. NCOA and NMFA come before you
again to support legislation introduced by Representative Slattery, H.R. 479, which extends
EIC to all eligible military families.
Although The Military Coalition fully supports the Administration's proposal to raise
the income limit for EIC eligibility, such action must also include the eligibility extension for
the EIC to eligible mihtary servicemembers stationed in overseas areas with their families.
Current law discriminates against the young, married, military servicemeinber in the low
income bracket. If he or she resides with his or her family stateside, or the family remains
stateside while the member is deployed overseas, he or she may be entitled to EIC. If,
however, the servicemember is assigned overseas and the family resides with him or in a
foreign country, there is no entitlement in law. NCOA and NMFA point out that this law is
patently unfair and should be amended.
IMPACT OF INELIGIBILITY
What does the loss of EIC mean in real terms to the individual family? A young man
entered the Army in September 1990 and was sent to Basic Training at Fort Jackson, South
Carolina. At the end of that training he married and was sent to Infantry training at Fort
Benning, Georgia. While in Georgia his wife had a baby. Since their baby was bom in
August of 1991, this Anny E-1 was eligible for $1,003 in Earned Income Credit for the
taxable year of 1991. The soldier next received orders to the 3rd Infantry Division in
Germany. He, his wife and their child transferred on their orders to the new duty station. It
is 1993, and the young Army Private, now an E-2, is anxious to file his income tax fonn.
eagerly looking forward to the $735 he is entitled to in earned income credit. His permanent
change of station to Germany has typically produced costs substantially above his
reimbursement from the Army. Because the family is on foreign soil, it is almost impossible
for his wife to find employment and add to the family income. Imagine his surprise and lack
of enthusiasm when he discovers that because he is overseas, he no longer qualifies for this
Translated into monthly income, his EIC for 1992 is worth $61.25 per month. That
amount would purchase approximately 12 quarts of inilk, 30 jars of baby food, 5 lbs. of
ground meat, 61bs. of chicken, 3 lbs. of frozen flounder, 10 lbs. of potatoes, 20 cans of
vegetables, 5 lbs. of fiour, 2 lbs. of carrots, 3 lbs. of apples, 5 lbs. of bananas, 64 ounces of
orange juice and 3 loaves of bread. Whether it is the young Airman assigned to the 5th Air
Force in Japan, the Marine Lance Corporal in Okinawa, the young Seaman Apprentice
assigned to the USS Belknap, in Gaeta, Italy, or the Army Private in Germany, the dollars
lost equal a degradation in their quality of life.
Additionally, overseas tours of duty are often costly for military families due to
decreased opportunities for spousal employment, the status of the dollar relative to foreign
currency, and the difficulty and expense of locating housing off-base. For these young
families, overseas tours can be financially devastating. Every penny that they spend must be
carefully prioritized. Denying them the EIC simply because they are serving their country at
an overseas post is not only an inequity, it is punitive.
NCOA and NMFA have not stood alone in their efforts to rectify this inequity in law.
TTie Departments of Treasury and Defense have endorsed our recommendation; however,
resolution proposals offered have included a requirement to find offsetting revenue before the
law could be amended. NCOA has pursued the amendment of EIC at various times since
1976. Satisfying the offsetting fund requirement has been the ultimate "roadblock" and has
become even more unlikely in recent years because of stringent budget restraints. Now when
the state of the economy is promoting tax reform legislation that would increase the EIC
level, NCOA and NMFA emphatically endorse any measure that would improve the financial
well-being of our young servicemembers who would be eligible for EIC relief. The inequity
in law must be resolved prior to increasing EIC levels.
These distinguished subconrunittees must clearly understand that The Military Coalition
position in the EIC issue goes beyond the equity shortfalls of the law.
o Taxpaying servicemembers, eligible for EIC, who are assigned overseas and
whose family subsequently joins the servicemember late during the tax year,
lose their entitlement to EIC. This occurs even if one of the aforementioned
acts is accomplished on the last day of the tax year.
o Loss of EIC entitlement is unfair, simply because servicemembers are
ordered overseas during a taxable year and want to take advantage of an
accompanied overseas tour with their families.
o Advanced overpayment of EIC caused by unclear calculation formulas.
o Lnproved reporting of non-taxable earned income by military finance centers
would improve EIC qualification by eligible military personnel.
o The complicated EIC filing claim form discourages eligible servicemembers
form obtaining needed benefits.
The Military Coalition fully supports the administration's proposal to raise the income
limit for eligibility for EIC. Many more enlisted families will be eligible for the credit under
this proposal. Retaining the health care credit will also encourage lower income families to
join the Active Duty Dependents Dental Plan which has a monthly premium of $19.30.
However, increasing the number of military families eligible for EIC without simultaneously
extending eligibility to those stationed overseas will make an already inequitable situation that
much worse. The need for EIC expansion becomes even more important now that the
overseas area troop strength is being reduced. This reduction will obviously force overseas
base closure action, realignment and relocation of remaining forces in some cases.
Subsequently this will result in the further loss of second income job opportunities for the
working spouses. Such actions increase a need for EIC relief for those qualifying military
families who continue to serve overseas.
The Military Coalition urges you to reverse the seventeen year old discriminatory
policy of not allowing otherwise eligible military families stationed overseas to qualify for
EIC by favorably considering the provisions of H.R. 479, a bill that most adequately
addresses both association's objection to the inequity in law as it applies to EIC eligibility
and urges its inclusion in any tax legislation that Committee deems appropriate.
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Chairman Rangel. We had a member testify this morning, Mr.
Sergeant Major Ouellette. That is right, sir.
Chairman Rangel. And we all supported that effort, too.
Sergeant Major Ouellette. Very good. Thank you very much,
Chairman Rangel. Nancy Kennedy from the United Way of
STATEMENT OF NANCY MOHR KENNEDY, CHIEF OF STAFF,
UNITED WAY OF AMERICA
Ms. Kennedy. Thank you, Mr. Chairman. It is good to see you.
Chairman Rangel. It is good to see you again.
Ms. Kennedy. I come before you today on behalf of United Way
of America, which is the service organization for hundreds of local
United Ways across the United States, who work with over 40,000
local agencies in service to people in need.
I was asked to come today just to endorse the earned income tax
credit and to convey to you the fact that we feel that it is a very
important component, that we think it is a very important way to
bring people off of dependency to self-sufficiency.
On the matter of the schedule, the EIC scheaule, we have for the
past 3 years been involved in a campaign, a public information
campaign, with all those agencies across the country, and someone
has calculated that we have gotten word to at least about 3 million
families. Whether or not they signed up because of that, I do not
know. But we are, in conjunction with the Internal Revenue Serv-
ice and other agencies, trying to get the word out.
I think one thing that you might look at is the fact that if some-
one files a standard short form or does not file, then they do not
Thank you. That is all.
[The prepared statement follows:]
NANCY MOHR KENNEDY
CHIEF OF STAFF
UNITED WAY OF AMERICA
Selected Aspects of Welfare Reform
The Subcommittee on Select Revenue Measures
The Subcommittee on Human Resources
Committee on Ways and Means
U.S. House of Representatives
The Honorable Charles B. Rangel , Chairman
The Honorable Robert T. Matsui , Acting Chairman
Tuesday, March 30, 1993
Chairman Rangol, Chairman Matsui, and Memberp; of the Subcommi ttot^s
on Select Revenues Measures and Human Resourcer. , my name is Nancy
Mohr Kennedy. I am Chief of Staff of United Way of America (UWA) .
Thank you for the opportunity to appear here today in support of
the Earned Income Tax Credit (EITC) as a means to provide work
incentives for low-income families and help create alternatives to
United Way of America, along with local United Ways located across
the country, support efforts to reform the nation's welfare system.
Our shared goal is to create a compassionate, rational system to
assist individuals and families in their guest for seil-
suf f iciency .
Recently, United Way of America's Public Policy Committee met and
reaffirmed it's commitment to work toward overcoming welfare
dependency, as well as removing barriers to independence and self-
sufficiency. Toward that end, our testimony focuses on the
importance of the Earned Income Tax Credit in achieving those
The EITC is a refundable tax credit from the IRS to working
families earning less than $22,370 with at least one child living
with them, and is a worthwhile tax credit that helps strengthen and
stabilize the American family by helping put food on the table and
pay the bills. It is an important economic development effort
because most benefits are spent locally, infusing over $11 billion
into state and local economies. The money is spent to pay bills,
purchase food, and cover other family necessities.
Originally enacted in 1975, the Earned Income Tax Credit was
greatly expanded in 1990 by President Bush and the Congress to
reward and encourage work and also to help offset the growing
burden that payroll taxes place on low-income working families.
Almost 14 million families now qualify for the credit, which
provides $10.7 billion annually in benefits to low-income working
The EITC provides a dollar-for-dollar reduction in the taxes an
eligible family owes to the Federal Government. Unlike most tax