CUTTING TAXES FOR THOSE WHO DON'T PAY THEM

NCPA Daily Policy Digest ^ | June 3, 2003 | Editorial

[bruinbirdman]

The new $350 billion tax bill exempts another three million-plus low-income workers from any federal tax liability whatsoever. It also expands the 10 percent income tax bracket, meaning that workers can earn more before leaping into the 15 percent and 25 percent brackets.

However, some workers who owe no federal taxes are not eligible for the bill's increased child tax credit of $1,000 for families with children. These families were not eligible for the partially refundable $600 child credit in the 2001 tax bill, but they do receive the Earned Income Tax Credit (EITC).

o Sen. Charles Grassley (R-Iowa) wants to make low income families who owe no federal income taxes eligible for the child tax credit, by making it refundable.

o These families do receive the EITC, which was designed to offset payroll taxes and is also refundable -- which means the government writes a check to people whose income after deductions is too low to owe any taxes.

o This includes families with about one in six children.

o In 2000, EITC payments totaled $31.8 billion for 19.2 million Americans, for an average credit of $1,658. Some 86 percent of the EITC went to workers who had little or no income tax liability.

Since refundable credits phase out as income rises, they raise marginal tax rates on workers with incomes in the phase-out range.

Critics of the tax bill have complained that most of its benefits go to higher income workers, but that is because they pay most income taxes:

o Internal Revenue Service data released late last year show that the top 1 percent of earners paid 37.4 percent of all federal income taxes in 2000.

o The top 5 percent paid 56.5 percent of federal taxes, and the top half of all earners paid 96.1 percent.

In other words, even before President Bush started slashing taxes on the poor by increasing the child tax credit in 2001, the bottom 50 percent of filers had next to no federal income tax liability.

Source: Editorial, "Even Luckier Duckies," Review & Outlook, Wall Street Journal, June 3, 2003.

For WSJ text (requires subscription)

For Policy Notes on the EITC and Income Taxes

For more on Tax Credits

[1stFreedom]

A tax credit to someone who doesn't pay taxes is in fact A TAX INCREASE! How? Because this money should be coming back to US. But instead it's being diverted and not refunded.

NO NEW TAXES. NO REFUND WITHOUT TAXATION!

[Zavien Doombringer]

[1stFreedom]

OK FOLKS

Make your own bumper stickers:

NO TAX REFUND WITHOUT TAXATION!

[1stFreedom]

Better yet:

NO TAX REFUND WITHOUT TAXATION:
If you don't pay taxes, you don't get a refund!

[bedolido]

hmmmmmmmm let's see... they don't pay taxes, but dems want to give them a tax refund. I'm confused...

again... they don't pay taxes, but dems want to give them a tax refund. no sounds the same... hmmmmmmm

I agree... no taxation without representa- wait... without paying any--- I just don't understand the logic.

[Search4Truth]

I'm going to Masseys and insist on a refund for that shirt I didn't buy, and see how that goes over. I'll let you know how it works out - from the county lockup.

[LiteKeeper]

How can you get back a portion of what you never paid?

[sirshackleton]

Of course, J. Goldberg on NRO brought up that the DEms didn't want a tax cut in the first place. Why all of the sudden are they now whining about non-tax payers getting a tax refund?

[Digger]

These 50% freeloaders then go out & vote for every bond issue. I believe GW took more off of tax paying. Just another government trick to push us further toward socialism - and from a conservative president - another Potomac two-step. Has there ever been any situation that turns out to be conservative from so-called unintended circumstances?

[Imagine]

If the poor paid more, then the wealthy would have to pay less. If the govt. wasted less, then we'd have more. Yes, that's right.

[Lunatic Fringe]

I would think if your income is THAT low, you should be more worried about getting a BETTER job rather than crying about not receiving more free money from the government. $10,000 a year? geez, how do people live like that? And with kids!

[biblewonk]

Negative tax liability bump.

[FairOpinion]

"NO TAX REFUND WITHOUT TAXATION!"

---

I also like:

"THIS IS A TAX CUT, NOT A WELFARE PROGRAM".

[newgeezer]

If I'm reading this article correctly -- and, if the writer has his facts straight -- you must not receive any Earned Income Tax Credit. Because, he makes it sound as if parents who receive EITC will not get the higher Child Tax Credit.

[Brimack34]

How many Republicans in the Senate???

[mdwakeup]

Five of the Republicans are already on board with the Lincoln bill to expand the child tax credit -- Snowe, Collins, Specter, Voinovich, and Warner. The child credit increase included in the tax cut left out 200,000 military families.

[kevkrom]

Social-engineering via the tax code. Again.

[larryjohnson]

TAX CUTS FOR TAX PAYERS !!
(it's shorter)

[FairOpinion]

"TAX CUTS FOR TAX PAYERS !! "

---

I like it!