The Bush tax cuts were not just for the wealthy
Over at the MacIver Institute this week, a look at the child tax credit and its impact, especially in Wisconsin.
Because of the Bush tax cuts, joint married filers earning less than $110,000 receive a per-child tax credit of $1000. The tax credit phases out after income reaches $110,000. The tax credit is also $1000 per child for single filers earning less than $75,000 and phases out above that point. Married filers filing separately, the phase-out begins at $55,000.
To qualify for the tax credit, the child must be under 17 and living in the household for at least half the year (with a few exceptions). The child must have some relation to the filer: son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes grandchild, niece or nephew. The child must be claimed as a dependent, and cannot have provided at least half of his/her own support. Finally, the child must be a citizen or resident alien.
I think my snow blower qualifies for the credit.
Prior to the Bush tax cuts, the per-child tax credit was only $500. Despite the rhetoric of how the Bush tax cuts only benefited the wealthy, the doubling of the child tax credit had a tremendous impact on the middle class.
Because it is a tax credit and not just a deduction, the credit goes directly to the tax filer’s bottom line. For example, if a family of five files their federal taxes and owes $5,000 before the child tax credit, the child tax credit would reduce their tax burden to $2000, a 60% reduction in their taxes owed. If the Bush tax cuts are allowed to expire, the family would only be allowed to reduce their tax burden by $1,500 ($500 per child), effectively a 75% increase in federal taxes for that family.
Normally I’m a believer that children should be seen and not heard. The best time for them to be seen is when I’m filling out my taxes. I’m willing to adopt the entire Vienna Boys Choir then.
Wisconsinites benefitted from this tax credit more than residents in most other states. The tax credit increase, along with the rest of the Bush tax cuts, are due to expire at the end of this year. Interestingly, there was some movement on the issue yesterday, although serious tax reform is not expected this year.
Interestingly, too, one of my critics who doesn’t understand the difference between the child care tax credit and the child tax credit accuses me of lying when I say there is a chance the Democrats could let this increased tax credit expire. He says President Obama promised early last year he wouldn’t let the increased credit expire. Apparently he’s never heard that all of President Obama’s promises have expiration dates.
But I hope he doesn’t mind if I’m at least as alarmist on the subject as the Center on Budget and Policy Priorities. Unhappily, they point out that failure to pass an extension of the increase in the child tax credit would affect an estimated 294,000 children in Wisconsin. They must be fascists to be concerned with children like that.