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Thu August 2, 2012
A quick guide to how federal tax cuts affect kids, part 1
I've gotten dozens of press releases in the past few days dealing with the extension of the Bush-era tax cuts.
And while I'm not keeping up with every blow-by-blow in the political death match over Congressional spending, I am trying to figure out how families who struggle to make ends meet are going to fare under some of these dueling policies.
To help keep you anchored as the tax cut debate swirls, let's look at some of the proposals by political conservatives this week. Next week, we'll switch sides.
Ok. Here we go.
The backdrop: Right now the main talk is about how much of the Bush-era tax cuts should stay...or go. The fact is these tax cuts did in fact balloon the federal deficit, and as a country we now owe trillions of dollars. Democrats and Republicans do not agree on whether tax cuts for even the richest Americans stimulate the economy, but they do agree that our now large deficit needs to be cut...and fast.
That's where kids come in.
Congressional Republicans have a plan that would cut taxes for the richest Americans. Mitt Romney's plan would do the same. Both plans call for scaling back the deficit by eliminating some tax cuts for middle class and low-income families and cutting spending on certain social programs.
Political conservatives like House Budget Committee Chairman Paul Ryan want both the Child Tax Credit and the Earned Income Tax Credit on the table.
The EITC in particular has been successful in helping families stay financially afloat. State of Opportunity's Jennifer Guerra spoke with a young Michigan woman last year about how the EITC helps her and her family:
Twenty-eight-year-old Tiffany Blackman makes $20,000 a year as a coordinator at a Michigan food bank. Her husband Rodrico has been unemployed for a year and they have three kids. Tiffany says after they pay their bills each month, the family has about $60 left over. So the money they get from the state and federal government helps.
Blackman: We use it to kind of keep us afloat throughout the year. Like our car repairs, anything with our children's school clothes, all of that is essentially coming back from any tax refund that we get back.
Last year, they got about $5,000 from the federal EITC and about $900 from the state.
Blackman: And over the last four years which we've been getting this, I really feel like there's hope in the boat out of poverty.
The Center on Budget and Policy Priorities estimates the EITC lifted 3.3 million kids out of poverty in 2010, and that the Child Tax Credit lifted 1.4 million kids out of poverty. In addition to eliminating these taxes, Ryan and Romney are also talking about spending cuts that affect kids. Food stamps are a particular target, with Ryans' March budget proposal cutting the program by 17 percent. A 2009 study estimated that fully half of all kids in America would need to rely on food stamps at some point before the time they turn 20. More next week...