Tax Credit = Welfare Check?

[CPLHUNTER]

Barack Obama's tax plan is the opposite of supply-side economics. He proposes to raise marginal rates for just about every federal tax. He also proposes a raft of tax credits that taxpayers can receive if they engage in various government-specified activities.

Moreover, the tax credits would mostly go to those who pay little or nothing in federal income taxes. His trick is to make the tax credits "refundable." Thus, if the tax credit is for $1,000, but the taxpayer would otherwise only pay $200 in taxes, the government would write a check to the taxpayer for $800. If the taxpayer pays nothing in federal income taxes, the government would pay him the whole $1,000.

In short, welfare spending is to be increased by paying more money out to low-income income tax filers.

The latest Congressional Budget Office data shows the bottom 40% of income earners already pays no income taxes.

When "tax credits" primarily go to this group in the form of checks from the government (rather than a reduction in their tax burden) it is simply an abuse of the language to call the spending a tax cut.

From the Wall Street Journal
http://www.wsj.com/article/SB1219103...st_emailed_day (http://www.wsj.com/article/SB121910303529751345.html?mod=most_emailed_day)

[Mu-Meson]

The Social Security payroll tax would be raised between 16% to 32% for families making over $250,000 a year. This means that the real returns these people get from their lifetime payments into the retirement program will be driven below 0%, according to my own previous research, which was published by the Cato Institute and elsewhere.

Lol. Even us Canucks aren't that crazy.

[Ordie]

Cutting taxes is a meaningless gesture.

If the Feds cut taxes.

The states will compensate the loss by raiding the local coffers of municipalities.

The local municipalities will compensate by introducing parcel taxes and bond measures. Usually to support schools, fire and police.

Cutting spending won't do because at the end of the day you still need to pay soldiers, sailors and air traffic controllers.

I think an optional flat tax proposal and creating efficiencies within government will eventually lead towards new revenues and balanced budget (Hopefully surpluses).

The tax credit will most likely go to paying personal debt, not goods and servcies.

[Winger]

Cutting taxes is a meaningless gesture.

If the Feds cut taxes.

The states will compensate the loss by raiding the local coffers of municipalities.

The local municipalities will compensate by introducing parcel taxes and bond measures. Usually to support schools, fire and police.

Cutting spending won't do because at the end of the day you still need to pay soldiers, sailors and air traffic controllers.

I think an optional flat tax proposal and creating efficiencies within government will eventually lead towards new revenues and balanced budget (Hopefully surpluses).

The tax credit will most likely go to paying personal debt, not goods and servcies.

That's the problem. We've recently had record revenues. No $h1t! As a result of tax cuts, ironic isn't it?

The issue is spending. Reduce the spending and you'll have a surplus. GWB went on a spending spree with Congress and blew the surplus. Yes, Congress. Our government.

[sinophile]

Cutting taxes is a meaningless gesture.
The tax credit will most likely go to paying personal debt, not goods and servcies.

I'm having a hard time even responding I'm laughing so hard. The average household credit card debt in the US is more than $8,000. How big a tax rebate do you think people will get?

Sorry, but the best you can hope for is folks will service existing debt. Worst case liquor and cigarettes.

Cutting taxes on businesses increases business investment (more jobs) IF the taxes cut are targeted to R&D, capital asset purchases and similar growth-related expenses.