Posts tagged with Tax Credits
Congress has been having trouble coming up with a debt limit measure because members want something they like. It's difficult to pass such a measure because the wants of the different Senators and Representatives conflict too much.
Members of Congress need to recognize that the"tooth ache" they are dealing with isn't likely to have a pleasant solution. Instead of looking for a measure they like they should concentrate on passing a temporary measure that includes provisions they know their opponents will dislike. This approach would allow members of each party to console their supporters by pointing out what the opposition had to give up. It would also provide an incentive to negotiate a solution to the current deficit situation.
I realize Congress is unlikely to consider any measure from outside, but I feel I should at least take a chance. If you think this proposal is worth considering you might email it to your Representative and Senators.
The provisions involving spending or taxes would be temporary based on certain budget deficit "triggers". Each provision would have a different trigger. When the deficit falls below a trigger, that provision would no long apply. Spending on a certain program could be resumed or a tax would be reduced on eliminated.
Congress would not necessarily eliminate any spending programs (tax credits would be considered as spending programs). Instead spending would be suspended until sufficient money was available for the program. Prior to the next deadline, Congress would determine the triggers for individual provisions.
I suggest the following unpopular provisions. The unpopular provision for Republicans would be extension of the payroll (FICA) tax to all income received from an employer including all the income received by athletes and entertainers. Business owners would not pay a higher tax on their incomes. Employers would not pay the matching tax on the higher employee income. This tax might be phased out as the deficit declines or another tax might be reduced.
An unpopular provision with Democrats would be to delay spending on new programs including Obamacare. Spending wouldn't begin until spending on the program wouldn't adversely affect the deficit. The deficit wouldn't need to be eliminated, only reduced. Elitist Democrats still don't understand that many Republican House members were able to defeat Democrats in 2010 because their constituents strongly opposed Obamacare.
Spending for grant programs to non-profit groups along with state and local governments would be suspended beginning January 1, 2014. The amount of spending involved could reduce the deficit sufficiently that many of those programs with a higher priority (as determined by Congress) could be continued. Others programs would be resumed as funds became available.
All tax credit programs would be suspended. Those credits already approved might be claimable at some future date. An exception would be for programs that benefit individuals making less than $50,000 per year. Tax credit programs in general would be the last of the "spending programs" to be resumed. Energy related credits might be the first to be reauthorized.
How can a Republican ignore the fact that there are many more federal taxes than just the federal income tax? Republicans have long reminded people that businesses don't pay taxes, their customers do. Normally, I would expect Democrats to try to con lower income groups into believing that the fact they don't pay the federal income tax means they are not being forced to pay for extravagant federal programs.
Workers making the minimum wage pay the Social Security and Medicare taxes based on their income. Winos pay federal liquor taxes on their cheap booze. The whiskey tax was one of first federal taxes. The federal government taxes shoes, phone calls, tobacco and the gasoline used in cars among other things.
Businesses set the prices of their goods to get the necessary money to pay various taxes including taxes on their incomes.
Instead, of criticizing those who don't make enough to pay federal income tax, Romney should be blaming Obama's unworkable economic program for forcing people to take jobs that don't provide them enough income to pay the income tax. Millions of those among the 47% who don't pay the income tax would love to pay it if they could only find jobs that pay enough for them to pay the income tax.
Romney should be reminding those who don't make enough to pay the federal income tax that they still pay other taxes which might be reduced if the federal government would cut its spending.
Romney should be criticizing Obama's welfare for the rich that allows them to spend their federal tax money on themselves. If the child of someone with low income wants federal assistance to attend college, the parents must fill out forms proving they lack income. The more income they have, the less assistance is available. Parents with high incomes can write out a check for the child's tuition and claim a federal tax credit. The more they make the more assistance they can provide.
High income homeowners who want federal assistance for certain home improvements can write out a check and claim the money spent as a tax credit. Low income homeowners must find a grant program in their community and compete with others for the funds.