tax relief

[low_delta]

The tax cut gave a $400 per child tax credit to families making over a certain amount.

Sen. Kay Bailey Hutchinson, R-Texas, said Republicans did not "intend" to exclude the lower-income families but were forced to by constraints on the size of the original tax bill.

"I think that because we had that $350 billion cap, something happened in the conference that caused some of the people who were intended to be covered by the child tax credit for refundability were not. I don't think anyone intended for that to be the case and now I think we need to come in and correct that," she said.

Big oops, I guess, huh? "Sorry folks. We wanted to but we ran out of money." Since when has running out of money stopped them? I wonder why they didn't extend it to all families, at a lower level? Like make it $300? Oh, here's why:

Initially, House Republican leaders resisted making a fix to the first tax bill passed last month.

"You understand these people don't pay taxes," a GOP aide explained.

Sen. Olympia Snowe, R-Maine, chief sponsor of the Senate measure along with Democrat Blanche Lincoln of Arkansas, took great exception to this sentiment, which was expressed by a number of her Republican colleagues.

"They do pay taxes," she said. "They pay payroll taxes that are an enormous burden."

http://www.cnn.com/2003/ALLPOLITICS/06/05/child.tax/index.html

Comments

[dwivian]

There is no such thing as payroll taxes.

There is Federal Tax, State Tax (if applicable), and the FICA INSURANCE PAYMENT. If you aren't paying state and federal taxes, all that is left is your FICA withholding, which is an insurance fee for Social Security. It's not a tax, and you get money back if you live long enough (though, as with all insurance systems, never as much as you put in).

The extension of the child-care credit to those that do not pay taxes is welfare, and there is no reasonable argument to deny that.

[low-delta.livejournal.com]

Then what is it that they keep referring to? Is it some vast left-wing conspiracy? I've heard that the payroll tax tops out at $80,000. Did the person who said that make it up?


So the child care credit is not a tax refund? If it is, then someone poor enough to pay no taxes won't recieve a check. If it's not a tax refund then shouldn't anyone with kids get it?

Actually, I haven't been able to learn any specifics of the child credit. I'd appreciate it if you could fill me in on any of these details.

[dwivian]

You hit the nail on the head -- it **IS** a conspiracy. It's called "spin" -- there is this attitude by those that are attempting to shift income using the government that anything the government takes out of a revenue stream must necessarily be a tax. Ugh...that's a tortured sentence. Simply -- if the government takes it, it is a tax, says one group.

This isn't true. The government takes fees, tariffs (which are an import duty, and not exactly a tax, but close), and taxes. The difference is significant, because of this issue. A tax can be credited. A tariff cannot be, as it is item specific, but it can be raised and lowered to advantage specific importer countries. And, a fee can NEVER be credited without fundamental changes in the underlying system.

Not terribly long ago we had a democrat-controlled legislature. During their tenure, they invented this idea of the refundable tax credit, which is a credit against tax paid that is allowed to EXCEED the taxes paid. Until then if your credits were more than you paid in, you got all you paid back, but no more. Now, you can get MORE back. This is the government transferring wealth, and it is welfare, outside the traditional welfare system.

There are several credits like this -- the Earned Income Credit (EIC) is the most heavily abused. But, until now the Child Exemption (reduction in taxes paid for each child you have) was NOT. If the law is passed to reduce the withholding via credit for each child by $400, and to make that credit a REFUNDABLE credit, those paying no income tax will have checks coming to them without participating in the scheme, thus receiving welfare payments for having kids (over and above what welfare already does in this regard).

Your second sentence has the system right -- the first pass on this law made it a tax refund, as it should be (thus the government does NOT take the money from you, and if it owes you anything sends you a cheque and a "oops, sorry" letter). The recent law changes are making it more than that. This is bad.

The treatment of the fee paid by citizens participating in the Social Security Scheme (FICA) is as an insurance payment. Thus, the name (Federal INSURANCE Contribution Act), which is made up of OASDI (Old Age, Survivors, and Disability Insurance) and MQFE (Medicare acronym is confusing! *grin*). Both are payments into a pool of money used to pay out INSURANCE claims, and thus payments in are Insurance Premiums. And, it is capped out because those with the money realized that they'll never see any real portion of that back in OASDI or MQFE, so they got their Senators to stop the withholding when it was unreasonable, so they could put the rest into actual retirement vehicles that work. I've seen how bad the payouts are, and this is, unfortunately, reasonable.

While it appears to be a tax because it is mandatory (except for many federal officials, including those same legislators, and some cities like Galveston Texas), it is not. A tax is a lien/seizure paid on a product, activity, or income, used to pay a government project. But, FICA is used to pay into a scheme that pays you back (or your doctors, but same thing) based on what you paid in. No other program works this way, thus it is named differently. It's a special case, and care should be taken to remember that.

If you credit payment into THIS scheme, you're basically giving away free disability, old age, and medical benefits. That's the first act towards socialized programs, and as we see in other countries they work badly, generate lots of suffering, and cost a whole HELL of a lot. I'm not in favor of putting guns to the heads of small business owners and married middle-income families and telling them "Give us 35%-50% of all you earn, because someone else needs bad medical care and pitiful retirement guarantees."

I hope that explains it better for you!

[low-delta.livejournal.com]

Yes, that helps a lot, but didn't follow al lof it, so I'll come back later and see if I can absorb more. :-)

Here's what the argument over the child credit seems like, to me. The Republicans set up this child credit with the income level high enough that nobody would get money back who didn't pay in the first place. The Democrats thought that paying only people who had children was unfair, and the best they could come up with to make it fair was to extend the credit to everyone with children. I'm on the fence on this one. I don't favor the idea of paying people who didn't pay in, but they shouldn't have chosen to favor people with kids in the first place.
Interesting that the Reps. didn't do anything to repeal the credit. They just used it.

Secondly, they keep touting these credits as money in the hands of the people, and the resultant spending will help the economy. If this were true, wouldn't it be good to get money to everyone?

[dwivian]

Took a while to come back to this --

Giving money to the people will stimulate the economy, but giving money away is welfare. Refusing to collect it is good government, and that's what the paybacks are supposed to be.

I don't like being forced to give my money away, because of the rampant abuse in the system. Both from welfare types, and from military contractors. Give them less money, and maybe they'll get better about how they spend it.

Oh, who am I kidding.....