July 26, 2014

Thoughts on the New House Tax Credit Bill

A couple hundred House Republicans and five handfuls of Democrats passed a tax bill yesterday. The bill tinkers with the federal child tax credit, in part by eliminating the marriage penalty, which means that couples with children can earn more money and still qualify for this kind of credit.  According to Mother Jones, the bill would cost the federal government some $115 billion over 10 years, which even in Washington is not chump change.

According to House Speaker Boehner, on the other hand,
Making the tax code simpler and fairer is good for jobs and economic growth, and for American families barely treading water in the Obama economy. The child tax credit legislation we passed today supports working families by eliminating the marriage penalty and better aligning the tax credit with the higher costs parents face. 
That sort of ignores the fact that (again according to Mother Jones) lower income folks, including single parent families, will be hurt by the change and that might not  be so good for jobs and economic growth. And I wonder if two-parents-working families making $150K really need a tax credit of a couple thousand dollars?  I mean, I get that every little bit helps us as individuals, but is that the kind of help our overall economy needs?

I'm wondering something else, too: If not having kids is a lifestyle choice, isn't having kids also a lifestyle choice?  And if lifestyle choices should not be supported by the Federal or State governments, why do we support those who choose to be parents through income tax credits, college tuition tax credits and even 'school choice' tax credits?  Not to mention paying for the parent lifestyle choice through health insurance coverage for things like infertility and erectile dysfunction drugs?

If, as Crying John noted, the goal is to help the families that are "barely treading water in the Obama economy" would it be better to reduce the income tax rates for everyone, rather than providing tax credits just for some people, who get them simply based on their lifestyle?

I've posed this question before, and will continue to put it out there, particularly now that we're getting closer to election season, when politicians on both sides of the aisle will ramp up their rhetoric on taxes, families, and what Americans want.

What I want, if anyone's interested, is fairness and tax equity, where we reduce the amount of taxes that are needed, because we limit the amount of personal welfare that's provided, whether it's going to deserving people who have very little or who have much. And where we limit corporate welfare, the kind that goes to new companies but not to old ones, or the kind that provides tax credits (that you and I pay for) to businesses to offset the minimum wage increase that was passed here in New York. These are but a few examples; I'm sure wherever you live, you can identify similar ones that don't make any sense.

I'm not anti-parent or anti-child or anti-tax break. I just think we all could use a break, across the board, not through piecemeal tinkering that politicians pass off as 'simplification'. We need to overhaul the tax code if we really want to get to fairness and tax equity, and we need to be bold about it.

Is it time for a flat tax? Time for us to have more money in our pockets each payday vs. having to plow through income tax software trying to find ways to put more money back in our pockets each spring? Time for everyone to be treated fairly across the board? Is it time for us to tax income like income, and stop fiddling around passing judgement, via tax credits, on how people spend that income?

What do you think? Is flatter fairer?