Thursday, June 5, 2003

USA Today Editorial: t
ax-cut package leaves low-income singles and low-income families behind

USA Today published an editorial today which is critical of some shortcomings in the recent tax cut bill passed by Congress and signed into law by President Bush last week.  The editorial is particularly critical of the fact that low-income single and low-income parents with dependent children will not receive any benefit under the new law.

Here's what the editors had to say:

In his weekly radio address on May 24, President Bush called a just-passed $350 billion tax-cut package a "victory for every family struggling to pay the bills." But details of the plan that emerged this week show millions of "struggling" taxpayers aren't getting any promised benefits.

Those shortchanged include low-wage individuals and families with children, including members of the U.S. military. The law's fine print also reveals that middle-income families will bear a heavier tax burden because they get less-generous breaks than those making more than $200,000.

The inequities are so glaring that they have prompted a scramble in Congress, with the White House's blessing, to make corrections. On Thursday, the Senate voted to provide relief to low-income families.

Certainly, the law's wrongs can be righted and without adding to the growing federal deficit. But that can happen only if legislators fund needed revisions by closing corporate tax loopholes or mining new revenue sources instead of conducting another raid on the U.S. Treasury.

Making the tax law fairer to low- and middle-income groups would serve several useful purposes. It would fulfill Bush's promise to give something back to everyone who pays federal taxes. It would bolster the long-time consensus behind a progressive tax code that takes a bigger bite as incomes rise. It also would provide the sluggish economy with an additional jolt, since families that live from paycheck to paycheck are likely to spend the extra dollars. Remember, stimulating the economy was a main reason for cutting taxes in the first place.

Among those left out of the tax cut:

Singles Some 8.1 million taxpayers would get nothing under the new law, according to the Center on Budget and Policy Priorities, a think tank that advocates for the poor. Most are unmarried, have no dependents and make less than $14,000 a year. They pay as much as $600 in income taxes, plus Social Security and Medicare levies. Also denied relief are some singles who have children or care for elderly relatives. Those with two dependents make as much as $54,200 and pay $5,200 in income taxes.

Working poor Although the law increases the child tax credit from $600 to $1,000, that doesn't benefit an estimated 6 million working families whose incomes are so low that they don't pay income taxes. Yet these are the very low-wage families that are supposed to be protected by current tax policy so they don't slip back onto welfare rolls. Plans to expand the child tax credit to include them had been in the Senate version of the tax bill, but were dropped to preserve corporate tax-avoidance schemes.

The Senate passed a bill on Thursday that would expand Customs Service fees to provide families $10 billion in relief, a third going to the working poor. While the plan is fiscally responsible, plugging corporate tax loopholes would be a better way to pay for it.

Yet some lawmakers in the House want to blow another hole in a deficit headed for a record $400 billion this year. They will help the working poor only if higher-income groups get an additional $100 billion in new tax cuts. And they won't identify spending cuts or new revenue to offset the costs.

Changes in the tax law are needed to fulfill Bush's promises. But they will be a victory for every taxpayer only if the corrections are better thought out and more mindful of the deficit than the original bill.


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