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  1. #1
    Senior Member JohnDoe2's Avatar
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    'Family Fairness Tax Reform' is hard on poor families

    'Family Fairness Tax Reform' is hard on poor families


    The "Economic Growth and Family
    Fair Tax" plan from Senators Rubio and Lee is ambitious and expensive, but it may hurt many low-income families with children, according to new estimates.

    By TaxVox, TaxVox MARCH 19, 2015

    • J. Scott Applewhite/AP/FileView Caption

    Senators Mike Lee (R-UT) and Marco Rubio (R-FL) made a big splash with their “Economic Growth and Family Fairness Tax Plan” last month, which among other things would create a new partially refundable $2,500 per child tax credit (CTC). The plan is ambitious and expensive, but it may hurt many low-income families with children, according to new Tax Policy Center estimates.

    The Tax Foundation projects that Lee and Rubio’s tax plan would increase the deficit by about 1.5 percent of GDP—about $300 billion—in 2018, and that assumes extremely optimistic revenue feedbacks from additional economic growth.

    Conventional revenue estimates would show an even bigger gap.

    The year 2018 is significant because that’s when several current law provisions aimed at helping low-income families are scheduled to expire. The most important allows families to claim a refundable child tax credit of 15 percent of earnings in excess of $3,000. But in 2018 that threshold will increase to about $15,000, meaning a family with two children and earnings under that amount could lose $1,800 of their credits (15% of the difference between $15,000 and $3,000).

    Recommended: Taxes in 2015: 7 changes and 9 weird deductions

    Lee and Rubio would let the more generous child credit provisions expire. Their $2,500 increase in the CTC would be partially refundable, but only up to the amount by which individual income tax plus payroll taxes (including the portion assessed on employers) exceeds the earned income tax credit.

    For most low-income households with children, that amount is small or even zero. Middle-income families would actually benefit more from the new refundable credit.

    How the 'Family Fairness tax' would affect families of different incomes. TAX POLICY CENTER


    TPC has not modeled the new plan, but examined a precursor offered by Senator Lee in 2013 that would have treated low-income families the same as the new proposal. Compared with the much less costly option of simply extending the current-law refundability provisions, the Lee proposal would reduce after-tax incomes for most households with children whose annual incomes are below $30,000 in 2018. Families with kids and annual incomes between $20,000 and $30,000 (in 2013 dollars) would lose more than $700 in refundable tax credits on average. Fully 80 percent would pay higher taxes or get smaller refunds. After-tax incomes for the poorest households would decline by an average of about 4 percent.

    In contrast, higher-income households with children would get a significant tax cut. Some would qualify for child tax credits of $3,500 per child—the existing $1,000 credit plus the additional $2,500. They’d also benefit from the cut in top tax rates and other provisions.


    Rubio and Lee argue that their plan would help families. When it comes to lower-income households, extending the current-law child credit provisions would help them much more. In the short run, higher-income households with kids might like the plan—at least as long as they don’t think too much about how higher deficits will affect their children’s future.


    http://www.csmonitor.com/Business/Ta...-poor-families

    The post “Family Fairness Tax Reform” is Hard on Poor Families appeared first on TaxVox.
    Last edited by JohnDoe2; 03-20-2015 at 01:50 PM.
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  2. #2
    Senior Member Judy's Avatar
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    Really? You stupid imbeciles. Why disgrace yourselves with such a stupid plan. There's already an independent's deduction for children under the income tax. Why do stupid politicians believe there should be multiple tax credits for children? If most Americans including the poor and middle class can't afford kids and an income tax, which requires you come up with these stupid tax credits, then why don't you get rid of the stupid income tax and pass the FairTax and offset the taxes they would pay up to the Household Consumption Allowance with the Rebate that's available for every citizen and legal resident household and solve the problem? What these tax credits actually represent is welfare because these low income families aren't paying any income tax to begin with. For any Republican to be playing with this gimic is a betrayal of the fundamental philosophy of the Republican Party, so stop it. Republican members of Congress who for whatever reason don't support the FairTax, should stay out of the tax issue and focus their energy on something else, because all you're doing is making a bad situation worse. You're not solving the problem, you're just reshaping it.

    And if you want to help "families", pass a 10 Year Moratorium on Immigration, deport all these illegal aliens out of here, and pass the FairTax, then sit back and watch how fast American Families can solve their own problems and fix their own situations with good jobs, higher wages and better benefits.

    Why do politicians think someone else's "families" are their responsibility? This nation isn't a nation of families any more than it's a nation of immigrants. It's a nation of individuals who are supposed to be treated on a fair and equal basis, not be the annual tool of political manipulation through the socialist gimics of a repugnant income tax.
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  3. #3
    Senior Member JohnDoe2's Avatar
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    MARCH 12, 2015

    Rubio-Lee Tax Plan Gets Thumbs Up From Tax Foundation

    The tax policy research group argues the plan would lead to sustained prosperity after an initially tough 10-year window

    Is Sen. Marco Rubio's tax plan: "puppies and rainbows" or "strongly pro-growth"? (Photo: AP)

    It takes money to make money, goes the old adage—and while that saying is usually applied at the level of individual businesses, it could be fairly used to describe the economic effects of the Rubio-Lee tax reform plan, according to an analysis by the Tax Foundation.


    Sens. Marco Rubio, R-Fla., and Mike Lee, R-Utah, the former a potential 2016 presidential candidate, introduced their sweeping tax reform proposal last week, and the measure has already received a fair amount of criticism.


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    A New York Times editorial derisively dubs it the Puppies and Rainbows Tax Plan, saying “it’s full of things everybody likes, at least on the Republican side: family tax cuts that will make it easier to buy the children a puppy, and capital tax cuts that chase a pot of capital investment gold at the end of the rainbow.”

    In short, the criticism is that Rubio-Lee would cost the government trillions it cannot afford.


    The Tax Foundation, a nonprofit, nonpartisan research foundation that advocates for broad-based, low-rate, simple and transparent tax rules, acknowledges the plan would increase the U.S. budget deficit by over $2 trillion (including added debt-servicing costs) during the initial 10-year budget window.


    But the authors of the analysis, Tax Foundation senior fellow Michael Schuyler and chief economist William McBride, emphasize that the proposal’s long-term impact would be to increase the size of the economy by over 15%, contributing an extra 1.44% annually to the currently projected GDP growth rate.


    Thus, the Tax Foundation analysts distinguish between a “static” model that ignores the impact that tax changes have on economic growth and a “dynamic” model that accounts for such tax-induced changes in economic activity.


    Based on their dynamic modeling, Schuyler and McBride write that “the Rubio-Lee plan would grow the economy, and the size of the economic pie is a major determinant of tax collections. In fact, some of the changes are so strongly pro-growth…that the model predicts the plan would increase federal revenue by over $90 billion annually in the long run.”


    The proposal has three key features, not all of them mutually consistent from an economic perspective.


    The first key thrust is the plan’s $2,500 child tax credit — the “Puppies” part of the plan in the Times’ telling.

    Rubio and Lee adopt this costly provision because they want the tax code to “better reflect the costs of raising children,” the authors write, though the economists add that their model is unable to quantify such social benefits.


    From an economic viewpoint, Schuyler and McBride argue that Rubio-Lee eliminates biases against savings and investment, particularly through reducing taxes on business income (both corporate and non-corporate) to a maximum of 25%; allowing immediate (rather than gradual) write-offs on equipment, intellectual property, inventory and other business investments; and eliminating the tax on capital gains and dividends. The proposal tweaks the code in many other ways as well — from an elimination of the estate tax to repeal of Obamacare surtaxes.


    Moreover, the proposal simplifies the tax code, mainly through the adoption of a two-rate tax structure (15% and 35%), with the latter’s joint-income threshold at exactly twice the individual rate ($150,000 and $75,000) so as to avoid a marriage penalty.


    Rubio-Lee further simplifies the code by eliminating all itemized deductions except for charity and mortgage interest, though it significantly trims deductions allowed for the latter. The plan also abolishes the alternative minimum tax.


    The plan has many other features which the economists detail, but the thrust of their analysis lies in their modeling of its overall effects, which is to spur a higher level of sustained prosperity through increased incentives to work, save and invest.


    Specifically, the Tax Foundation analysts say the plan would produce 15% higher GDP, or $2.7 trillion annually in 2015 GDP terms; increase investment in plants and equipment by 50%; boost the labor force by 2.7 million jobs; and raise hourly wages by 12.5%.

    But making all this money takes money — and the cost to federal revenue amounts to $414 billion annually.

    At current GDP levels, such revenue losses would increase federal debt by $2.3 trillion in the first 10 years, but future revenues would start subtracting from the debt by around 2040.


    At the individual level, the Tax Foundation analysts find that Rubio-Lee would boost after-tax income at all levels — by 56% for the lowest 10% of earners, 23% for the 10%-20% decile, 15.3% for the 50%-60% decile and 19.9% for the 90%-100% decile. On average, Americans would see their incomes rise by about 18%.

    http://www.thinkadvisor.com/2015/03/...om-tax-foundat

    Last edited by JohnDoe2; 03-20-2015 at 01:48 PM.
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  4. #4
    Senior Member Judy's Avatar
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    From an economic viewpoint, Schuyler and McBride argue that Rubio-Lee eliminates biases against savings and investment, particularly through reducing taxes on business income (both corporate and non-corporate) to a maximum of 25%; allowing immediate (rather than gradual) write-offs on equipment, intellectual property, inventory and other business investments; and eliminating the tax on capital gains and dividends. The proposal tweaks the code in many other ways as well — from an elimination of the estate tax to repeal of Obamacare surtaxes.
    I support the repeal of the capital gains tax, the dividends tax, the estate tax and Obamacare surtaxes. Most Republicans who support the FairTax will also support these income tax repeals. It's not the FairTax, but it's moving the income tax code into the hopper where it should be. This bill would only leave the corporate and individual income taxes, the payroll tax, interest tax and the gift tax to get rid of when we pass the FairTax.

    So if the FairTax can't pass until we have a Republican Senate and 1 Loyal Republican President, I'll support this plan until we do but only with the repeal of the capital gains, dividends and estate taxes.
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