This is how the benefits are laid out in my
local state paper. See NYT graph
Sizing Up the Tax Cut at http://www.nytimes.com/2003/05/29/politics/29CHIL.html
, which I tried to send through filters but at 664KB was probably too large,
eh? Two articles below, one is
commentary.
KWC
Tax Cut’s Effects on Income: Examples of
how the new tax bill will lower taxes on individuals and married
couples
|
Income |
Assumes |
Tax Savings
$ |
|
Annual
$ |
Capital Gains
$ |
Dividend Income $
|
Single No
Kids |
Married 2 children under
17 |
|
41,000 |
500 |
500 |
211 |
1,208 |
|
63,000 |
2,000 |
1,000 |
551 |
1,100 |
|
126,000 |
4,000 |
2,000 |
1,867 |
3,028 |
|
170,000 |
8.000 |
2,000 |
2,743 |
3,148 |
|
212,000 |
10,000 |
2,000 |
3,637 |
3,932 |
|
530,000 |
20,000 |
10,000 |
12,838 |
13,442 |
Source: Deloitte &
Touche
Tax Law Omits Child Credit in Low-Income
Brackets
By David Firestone, NYT, May 29, 2003 @
http://www.nytimes.com/2003/05/29/politics/29CHIL.html
WASHINGTON,
May 28 — A last-minute revision by House and Senate leaders in the tax bill
that President Bush signed today will
prevent
millions of minimum-wage families from receiving the increased child credit
that is in the measure,
say
Congressional officials and outside groups.
Most
taxpayers will receive a $400-a-child check in the mail this summer as a
result of the law, which raises the child tax credit, to $1,000 from
$600. It had been clear from the
beginning that the wealthiest families would not receive the credit, which is
intended to phase out at high incomes.
But after studying the bill approved on Friday, liberal and child
advocacy groups discovered that a different group of families would also not
benefit from the $400 increase — families who make just above the minimum
wage.
Because
of the formula for calculating the credit, most families with incomes from
$10,500 to $26,625 will not benefit.
The Center on Budget and Policy Priorities, a liberal group, says those
families include
11.9
million children, or one of every six children under
17.
"I
don't know why they would cut that out of the bill,"
said Senator Blanche Lincoln,
the Arkansas Democrat
who persuaded the full Senate to send the credit to many more low income
families before the provision was dropped in conference. "These
are the people who need it the most and who will spend it the
most. These are the people who buy the blue
jeans and the detergent and who will stimulate the economy with their
spending." Ms. Lincoln noted that
nearly half of all taxpayers in her state had adjusted gross incomes that were
less than $20,000.
Families
with incomes lower than $10,500 will also not receive the refund checks. But under the 2001 tax revision, they
would not have been eligible for either the $600 or the $1,000 credits because
they do not pay federal taxes. Proposals to give them the credits
failed on the House and Senate floors on party-line
votes.
The
Senate provision that did pass was intended to help those families making
$10,500
to $26,625
who do pay federal taxes and could have taken all or part of the $600
credit. The provision, which
would have cost $3.5 billion, would have allowed those families to receive
some or all of the extra $400 in the new law.
Most
families with children who make about $30,000 or less are also eligible for
the earned
income credit,
which the law does not change. In
addition, the law has a few other benefits for low income earners, like
expanding the lowest tax bracket and a temporary reduction in the penalty on
two-income couples.
Several
centrist senators worked hard to make the child credit fully refundable for
all low income families, and the full Senate voted this month to include a
provision that would have included the minimum-wage families.
But
the provision was dropped in the House-Senate conference,
where tax writers spent days trying to cram many tax cuts — most prominently,
cuts in the taxes on stock dividends and capital gains — into a bill that the
Senate said could not be larger than $350
billion.
House
Republicans,
who acknowledged the gap on the child credit, blamed
the Senate
for insisting on its $350 billion cap, saying the low-income families could
have been covered had the Senate been more flexible. A spokeswoman for the
Republicans on the House Ways and Means Committee, Christin Tinsworth, noted
that the provision was included in an agreement reached last week by
Representative Bill Thomas,
Republican of California,
the committee chairman, and Senator Charles E. Grassley,
Republican of Iowa,
chairman of the Senate Finance Committee.
That
agreement would have cost $380
billion,
but it fell apart when an important swing senator, George V.
Voinovich,
Republican of Ohio,
said he could not approve any bill that exceeded $350 billion. To satisfy him
and the Senate, Ms. Tinsworth said, the child credit provision was dropped,
along with other costs.
"The
Senate preferred to have $20 billion in state aid," she said. "But when we had
to squeeze it all to $350 billion,
they weren't talking about the child credits.
This bill does a lot to help people who need help. But
its primary purpose was to generate jobs.
Apparently, whatever
we do is not going to be enough for some segments of the
population."
But
Democrats and children's advocacy groups said the Republican demand for large
cuts in the dividend tax, which they said benefits primarily wealthy
taxpayers, pushed away the credit from low income families. "If we were going
to have a tax cut to give $1,000 to all these other kids, there's no reason
not to include these kids, too," said David Harris,
president of the Children's Research and Education Institute.
"Their
families are working and playing by the rules and are left out, though it
would not have cost too much to include them."
A
spokeswoman for Mr. Voinovich said the senator would have been happy to extend
the child credits, but believed that the entire package should not pass $350
billion. The tax writers were free to reduce the dividend tax cut, noted the
spokeswoman, Marcie Ridgway.
The
gap in the number of families who receive the child credit occurs because of
how the formula was arranged in 2001.
Congress decided then to give refunds of the credit to low income
families, but just to a maximum of 10 percent of the amount they made over
$10,000, or a refund of $600, whichever
was lower.
The $10,000 amount was indexed to inflation and is now
$10,500.
When
the credit was raised to $1,000, many families could not qualify for the extra
amount, because the 10 percent maximum still limited them. Ms. Lincoln proposed raising the
formula to 15
percent,
which would have covered the increase in the credit for most of those
families. Her proposal made it through the Senate Finance Committee, but later
she voted against the full cut. Because
her vote and those of other supporters were not necessary for final
passage,
Republicans knew they could drop the provision without hurting the bill's
chances in the Senate.
"I
guess this shows us what our priorities are," Ms. Lincoln
said.
"I think this tax bill is very irresponsible in the way it treats
families."
Excerpts: The Tax-Cut Skeptics Back Home
By
David S. Broder, WP, Wednesday, May 28, 2003; Page A19 @ http://www.washingtonpost.com/wp-dyn/articles/A46755-2003May27.html
Well,
they did it. The Republicans in Congress
cobbled together one of the strangest, least plausible tax bills in
history
and sent it off to President Bush, who discovered hidden virtues in a measure
whose provisions he had repeatedly called woefully inadequate for the task of
stimulating a sickly economy.
You
have to hope that someone somewhere will find something in the bill that
inclines him or her to speed up a purchase or an investment.
But the start-and-stop
formulas,
with incentives phasing in and phasing out on a schedule that
was
dictated by the scramble for votes -- not by any economic
rationale
-- make this even more of a gamble than the Bush tax cut of 2001. That one, as
we all know, was supposed to boost the economy, but it has not prevented the
loss of more than 2 million jobs.
The
public is plainly skeptical about the medicine this administration keeps
prescribing.
The most stunning evidence of these doubts is found in last week's NBC
News-Wall Street Journal poll. Only 29
percent
said they agreed with the statement that tax cuts are the best way to increase
economic growth and create jobs, while 64
percent
said there are better ways to improve the
economy.
Only
25 percent said they thought the Bush tax cuts of 2001 have helped the
economy, with most of the others saying they had no real effect. When those
polled were offered five alternative ways of stimulating the current economy,
the most popular option was to give financial aid to state governments facing
budget deficits. A $20 billion bailout is something Bush accepted only
reluctantly, as the price of gaining one or two Senate
votes.
More
than six out of 10 of those surveyed said they agreed that Bush's economic
policy relies too heavily on tax cuts and not enough on direct job
creation,
that it benefits the wealthy more than average Americans and that it will
increase the federal budget deficit -- which it surely
will.
Meanwhile, out in the
real world, the hard choices that
Washington evades are being made by state legislatures and governors. My
travels took me to Oregon and Indiana in recent days, and the fiscal situation
in both states is grim. Indiana officials say they have lost more
manufacturing jobs in the past two years than any other state. Unemployment in
Oregon is at 8 percent, and tax revenue continues to fall short of even the
downward-revised estimates.
…I
cannot prove it, but my latest trip added evidence that the public pessimism,
which has been blamed for the sluggish economy, is directly related to the
plight of state and local governments. People in states such as Oregon and
Indiana are being battered by daily television bulletins and newspaper
headlines reporting that the governments closest to them are being forced to
take actions that threaten their quality of life.
The
debates in Washington on a new tax cut are remote and almost indecipherable.
Most citizens cannot see how they will benefit from the hodgepodge of tax
changes just enacted. But the actions being taken at the state and local
levels are specific and immediate in their consequences. The debates in Washington on a new tax
cut are remote and almost indecipherable. Most citizens cannot see how they
will benefit from the hodgepodge of tax changes just enacted. But the actions
being taken at the state and local levels are specific and immediate in their
consequences. (end of
excerpts)
