Capitol Hill and the White House are throwing around the idea of doubling the $1,000 per child tax credit to $2,000 per child.
If the plan was to actually give parents $2,000 for each child in America, that would be quite a big deal. But it won’t be, so don’t waste time thinking about the shoes and coats and bicycles you could buy your kids with the tax savings.
What’s being proposed is a sleight of hand, or a tax unicorn. The child tax credit is there in the law books all right, but not in terms of money actually getting to parents. For people to actually qualify, there would have to be major changes to the tax-credit structure that are not included in the Republican plan. Indeed, without those changes, the full credit may not be collected by a single household.
Welcome to tax trickery—Capitol Hill and Trump administration style.
In 2015 Americans filed 150.5 million tax returns. Fewer than a third of them, 47.2 million, listed any child dependents.
In all, 83 million children were listed as dependents, an average of 1.75 children per household with kids.
So, you might reasonably assume that Congress approved $83 billion of child tax credits and that the average household with kids got $1,750 in tax credits.
Not a chance.
Only 22.4 million taxpayer households qualified for the child tax credit. That’s a small minority of all taxpayers and less than half of households with dependent children.
Those 22.4 million qualifying households got tax credits totaling $27.1 billion, IRS Table data shows. The actual tax credits totaled not $83 billion, but just $27 billion, a third as much.
These households averaged just $1,211 in tax credits each, even though many taxpayer households had two, three, four or more children.
So how did the $1,000 per child tax credit shrink so much? Why were no credits issued for a large majority of America’s children? And what does that mean for the proposal to double the credit to $2,000 per child?
To start with, Congress denies the tax credit to parents who are affluent or poor.
The tax credit can only be used to write your federal income tax down to zero. So, if you are a single mother with four kids you might think you get $4,000 of tax credits.
Nope.
If your federal income tax is $127 and you have four kids, you save only $127. The imaginary $4,000 value of the tax credits is reduced to an imaginary $3,873.
And what of affluent parents—not rich, just not poor?
The existing $1,000 per child credit is phased out as parental incomes rise. The phase-out starts at $75,000 for single mothers and $110,000 for married couples. And the phase-out is $50 for each $1,000 of income above those limits.
So, a single mother who made more than $95,000 last year had her child tax credit reduced to zero. So does a mother who makes $94,001. That’s because if you are one dollar into the next $1,000 income level you lose $50 of child tax credit. A mother who makes $93,999 is better off under this system by $48.
The system also excludes children who turn 17 before Dec. 31.
And poor parents are excluded because the child tax credit can only be used to write down your income tax bill, not to get a check from the government.
So, who would a $2,000 tax credit help? Unless the definition is expanded and changed, the answer is very few parents and, potentially, none.
But doubling the child tax credit sounds like a family-friendly policy. And that’s what really matters in this era of fake policy from the Trump administration and its Republican allies in Congress.
Parents and others would know this if Congress held hearings on its tax plan or if the one Donald Trump claimed he had ready to go more than two years ago—in September 2015—existed. Instead, we will be treated to a tax plan—not a bill, but a plan—that will be rushed through Congress with no hearings.
The lesson? Parents, don’t count on more money in your pockets. Think of the $2,000 child tax credit, absent a major rewrite of the rules, as a tax unicorn—written and talked about, but never real.
Related Stories
- Stop Trying to Convince Trump Voters—Start Trying to Win
- The KKK: White America’s Primal Scream
- Google and Facebook's New Love for Pay Walls Will Make Online Publishing Less Open
from AlterNet.org Main RSS Feed http://ift.tt/2z4ncGM
News Today: How the Republican Tax Plan Head-Fakes Parents and Stiffs Children
0 komentar:
Post a Comment