The view is nice from the yacht

May 29, 2003 6:14 AM

The bait and switch. A last-minute revision by House and Senate leaders in the tax bill that President Bush signed today will prevent millions of minimum-wage families from receiving the increased child credit that is in the measure.
posted by four panels (21 comments total)

Compassionate conservatism at work.

Let the little poor children get jobs, the lazy bastards!

Leave no child behind!

Good Christians hard at work in the Republican party carrying out the commands of Jesus.

To whom little is given, f*ck 'em!
posted by nofundy at 6:25 AM on May 29, 2003

I love how Voinovich's spokesperson mentions the dividend tax cuts included in the current 350 billion as an option. Kind of a cut at the nature of the Tax Bill as it stands: How many people with salaries less than 30k a year are receiving taxable dividends -- or even taxable dividends to such a degree that a cut in the amount of tax would even effect them?

Nope, when it comes down to it, dividend tax cuts effect only those to whom a small percentage cut might mean tens or even hundreds of thousands of dollars.

You know what I'm talkin 'bout, Willis.
posted by thanotopsis at 6:32 AM on May 29, 2003

A Modest Proposal: For Preventing The Children of Poor People in Ireland From Being A burden to Their Parents or Country, and For Making Them Beneficial to The Public - By Jonathan Swift (1729)

Plus ça Change............
posted by troutfishing at 6:42 AM on May 29, 2003

How do these tax writers think they're not going to hell?
posted by hari at 6:47 AM on May 29, 2003

House Republicans, who acknowledged the gap on the child credit, blamed the Senate for insisting on its $350 billion cap, saying the low-income families could have been covered had the Senate been more flexible.

If that gosh-darn Senate could have just been a little more flexible, both the rich and the poor could have got a tax cut! But thanks to those Senate numpties, we could only do the tax cut for rich people. Oh, how we tried! It was the Senate's fault! Oh well, better luck next time, poor people.
posted by RylandDotNet at 7:00 AM on May 29, 2003

sucks to be poor
posted by shadow45 at 7:03 AM on May 29, 2003

sucks to be rich and dying in the gutter with your teeth kicked in and your intestines leaking out too.
posted by quonsar at 7:21 AM on May 29, 2003

Okay, I must be dense, but I'm swimming in the numbers of that article.

I take it the families who make less than $10,500 aren't an issue for anyone -- they don't pay federal income tax, so thus a "refund" doesn't really apply (unless this is a new subsidy, rather than a refund of taxes paid.)

The issue being raised is about families that make more than $10,500 but less than $26,625 "who do pay federal taxes and could have taken all or part of the $600 credit."

"Congress decided then to give refunds of the credit to low income families, but just to a maximum of 10 percent of the amount they made over $10,000, or a refund of $600, whichever was lower."

So I'm confused. Raise the "or a refund of $1,000" and you get a household making $25,000 going from $600 to $1000, and a household of $15,000 going from $500 to $500 -- ie, still staying essentially the same (ie, 10% additional tax cut per child).

So the issue is that:

"When the credit was raised to $1,000, many families could not qualify for the extra amount, because the 10 percent maximum still limited them. Ms. Lincoln proposed raising the formula to 15 percent, which would have covered the increase in the credit for most of those families."

Maybe I'm just confused here on where the sense of outrage is supposed to generate from ... I guess from the idea that the tax cut should be disproportionately large in percentage for lower income families?

Damn, I sound like a Republican defender here, which I'm not. I guess I'm just not seeing where there is a FPP "bait and switch".
posted by bclark at 7:28 AM on May 29, 2003

You shouldn't get a "refund" if you didn't pay anything in the first place.

A tax cut is not a redistributionist welfare program.
posted by pjdoland at 7:57 AM on May 29, 2003

So the issue is that:

"When the credit was raised to $1,000, many families could not qualify for the extra amount, because the 10 percent maximum still limited them. Ms. Lincoln proposed raising the formula to 15 percent, which would have covered the increase in the credit for most of those families."

Maybe I'm just confused here on where the sense of outrage is supposed to generate from ... I guess from the idea that the tax cut should be disproportionately large in percentage for lower income families?

The issue, I believe, is that one of the lauded triumphs for the "working class" was the new tax credit for working families in the new tax bill.

The new tax credit for working families was nullified. So, what was going to be included was not.

What was said to sell the plan is no longer so.

The credit of $1000 is not true. It will remain at $600 for most families with income 10k - 26k.

I have a feeling they weren't notified, and may still support the President, the troops, and the tax cut that is going to allow them to spur the economy.

Damn, I sound like a Republican defender here, which I'm not. I guess I'm just not seeing where there is a FPP "bait and switch".

So, you tell a group of people that the tax cut will benefit them. They support it. The tax plan then does not benefit them. Cheers all around.
posted by the fire you left me at 8:00 AM on May 29, 2003

"This is very, very familiar," says Karlyn Bowman, an opinion expert at the American Enterprise Institute. "Over the last 35 years, in most polls people have been very skeptical of political promises on tax cuts."

After the tax cuts of 1981 and 1986, few people thought they got much tax relief. Even those who were taken off the rolls completely in 1986 didn't think their taxes had gone down. That's because people view their tax burdens as a package, including federal, state, property, and sales taxes, she says.
posted by the fire you left me at 8:04 AM on May 29, 2003

Sometimes I think I should believe in god just so I could have the comfort of knowing that these people will be spending eternity either trapped with bound hands in a pit of venomous snakes, or wreathed in withering flame-- or perhaps, if we're lucky, gripped entirely by ice.
posted by Cerebus at 8:24 AM on May 29, 2003

heh. these people INVENTED god.
posted by quonsar at 9:53 AM on May 29, 2003

You can read the bill yourself, if you'd like.
posted by MrMoonPie at 10:03 AM on May 29, 2003

The issue, I believe, is that one of the lauded triumphs for the "working class" was the new tax credit for working families in the new tax bill.

The new tax credit for working families was nullified. So, what was going to be included was not.

Maybe it's a definitional disconnect I'm having then. A family of three bringing in a household income of $30K still seems like a "working family" to me (at least in most parts of the country.) A family of three making $15K seems like a "below the poverty line" kinda situation.

You can read the bill yourself, if you'd like.

I tried. I don't know enough tax accounting to really be able to sort through it all. How much federal tax would a family with a household income of $25K even pay, with the normal sort of scope of deductions?
posted by bclark at 10:33 AM on May 29, 2003

bclark: This is an after-tax deduction, so it doesn't matter so much what they actually owe in taxes. Whether you deserve a refund (through owning a house, having kids, or other deductions such as a business loss) or wind up owing at the end, a $600 credit is a $600 credit.

Of course it's disappointing that this particular credit didn't make it through, but the tangible result would have been largely negligible: this is a class of taxpayers whose liability is already quite limited. With the increases in exemptions and standard deductions ever since the 1986 tax reform act, as well as the wide expansion of the Earned Income Tax Credit under recent administrations, and the newish 10% tax bracket, the working poor aren't often paying very much in taxes as it is (though of course the argument remains that for them a tax dollar going in or coming back is much more valuable).

Here's a rough chart (with the odd double-spacing that the PRE tag gets in the blue, perhaps something to do with nested blockquotes?). The leftmost numbers are the Taxable Income; first column represents the available credit under the first Bush tax cut; the second column represents the second Bush tax cut as passed into law; the third column represents the formula that Rep. Lincoln and others were shooting for. The numbers in the columns represent the increased child credit to which the taxpayers at this level are entitled over and above the pre-2001 code.

	2001	2003	2003A
	600	1000	1000
10500	0	0	0
12500	200	200	300
15000	450	450	675
17500	600	700	1000
20000	600	950	1000
22500	600	1000	1000
25000	600	1000	1000
26500	600	1000	1000

There are thus three classes of people just in this economic grouping: those who could have seen a modest increase in the credit they would be due, but won't; those who will see a modest increase, though they could have gotten more back; and those who will see an increase but would not have been eligible for the more generous limit in any event. Only in the narrow middle does it wind up being as much as $300. Also note that due to other provisions of the law, some people will end up paying less in taxes regardless of the child tax credit question. The bulk of this credit winds up going to the higher end of the low-income group, which is where the bulk of the taxes are paid -- that is, it will go to actually relieve tax that people must pay (even if they get a refund anyway) as opposed to being a credit to non-payers (although some in the lower bracket probably do pay a little bit of tax). What happened here was that Congress resisted an attempt to turn the Child Tax Credit into an Earned Income Tax Credit "reverse tax". The latter is intended to create incentives for the working poor to, well, work, and has strong bipartisan support as a result. The Child Tax Credit becoming a reverse tax probably creates an incentive curve toward having children, even if this is neither intended nor something that people having children would ever realistically consider, and as such doesn't serve quite the same public purpose.
posted by dhartung at 1:35 PM on May 29, 2003

Thanks, dhartung ... I can actually wrap my arms around it now, that spiffy chart helped a lot.

That's what I love about Metafilter: someone smarter than yourself will be around in an hour or two to help you if you just make yourself comfortable.
posted by bclark at 1:44 PM on May 29, 2003

From What the Bush tax cut could have bought at Salon, a tangential but interesting list:

Here's an itemized list of things the tax cut might have paid for. They are diverse, pressing, some would say essential -- not just to low-income Americans, but to many citizens who, having had a choice, might have directed their billions elsewhere.

Tax-cut total: $330 billion

Amount needed to provide health insurance for all 9.2 million currently uninsured children for one year: $13 billion

Amount needed to provide health insurance for all 41.2 million uninsured Americans, including children, for one year: $98 billion

Amount needed to close state budget gaps across the country: $78 billion

Amount needed to hire an additional 100,000 teachers to reduce class size, provide grants to repair 6,000 schools and assist with new-school construction, and provide additional math and reading help for over 9 million eligible low-income students: $300 billion

Amount needed to end homelessness for chronically homeless people within 10 years: $1.3 billion per year to create and sustain 150,000 units of permanent supportive housing

Amount needed by the Environmental Protection Agency to complete cleanups at high-priority toxic waste sites through the Superfund program: $92 million

Cost of Head Start for all 1.8 million children, up to 5 years old, who currently need but don't receive it: $25 billion

Cost of continuing to provide grants to potentially jeopardized regional poison control centers and maintain a toll-free poison information phone number between 2005 and 2009: $142 million

Cost of USDA testing of 12,500 cattle samples for mad cow disease, in addition to homeland security measures such as physical security upgrades at lab facilities and background investigation of workers: $21.7 million

Budgeted cost of continuing to enable states to meet energy emergencies due to extremes in temperature, either during severe cold weather in the winter or sustained heat waves in the summer: $1.7 billion

Cost of measures to improve food safety in 2003, including hiring additional FDA inspectors, and developing new ways for federal inspectors to detect food-borne illnesses in meat and poultry and determine the source of contamination: $101 million

Estimated homeland security costs for full support of state and local emergency personnel in their efforts to prevent and respond to acts of terrorism for three years: $12 billion

Cost of providing housing assistance nationwide for victims of domestic violence from 2004 through 2008: $100 million

Cost of hiring 100 new public-school teachers: $3.125 million

Cost of hiring 100 state child-care workers: $2.08 million

Cost of fully immunizing 100 children against preventable diseases: $64,433

Price of 250,000 new fire trucks: $56.2 billion

Identified funding needs for community-based services in the care and treatment of HIV/AIDS in 2002: $2 billion

Identified funding needs for HIV prevention and surveillance prevention programs at the Centers for Disease Control and Prevention: $1 billion

Identified funding needs for HIV/AIDS research at the National Institutes of Health: $2.9 billion

Estimated cost of funding Older Americans Act programs for seniors -- such as transportation, delivered meals and elder abuse prevention -- for 10 years: $39 billion

Cost of providing needed assistive technology and durable medical equipment for 1 million individuals with disabilities for 10 years: $39 billion

Cost of compensating federal employees called to active duty in the uniformed services or National Guard for the difference between their civilian and military pay: $89 million over the 2004-2008 period

Yearly cost of direct treatment for mental illness in both the private and public sectors in the U.S.: $92 billion

Estimated cost of spending for countermeasures against smallpox, anthrax, botulinum toxin, plague and Ebola under Project BioShield: $5.6 billion between 2004 and 2013

Cost of 60 million doses of an improved smallpox vaccine: $900 million

Annual cost of providing services to foster children, including educational assistance, job placement, health services and room and board: $200 million

Amount needed to establish a National Housing Trust to provide communities with funds to build, rehabilitate and preserve 1.5 million units of affordable housing over the next 10 years: $5 billion

Cost, per recipient, of Job Corps, an education and training program benefiting disadvantaged youth and young adults: $17,000

Federal funding requested in 2004 to maintain the National Domestic Violence Hotline: $3 million

Federal funding requested in 2004 for the national Abandoned Infants Assistance program: $45 million

Cost of assisting states in covering the excess costs of providing special education services to children with disabilities: $8.9 billion

Annual cost of providing funding to public libraries through state formula grants so that libraries can promote wider access to learning and information: $1.6 billion between 2004 and 2009

Cost of providing grants for treatment, counseling and referral for runaway and homeless youth subjected to sexual abuse in 2003: $15 million

Annual cost of funding the National Center for Missing and Exploited Children: $20 million
posted by y2karl at 2:15 PM on May 29, 2003

I [box] RylandDotNet and quonsar.
posted by UKnowForKids at 4:00 PM on May 29, 2003

After reading y2karl's list, is there still anybody who wants to claim Bush is not a complete idiot?
posted by salmacis at 4:38 PM on May 29, 2003

Salmacis,

Yeah I'll take that.

Seems to me the argument that most critics are putting forth is that the bill did not go far enough. So Bush is an idiot for wanting to cut poor people's tax liability? For allowing Congress to reduce the scope of his proposed tax cut? Or an idiot for not spending public monies on y2karl's list (which by the way, totals over $689 billion, over twice as much as the tax cut proposal)? Or maybe we should do both, wouldn't that be great? But that would mean that we'd have to pay more taxes, and I thought the goal here was to reduce the tax burden on the poor. Oh wait ... we could just go deeper into debt, that would solve everything!

Seriously, though, it's interesting that the opening quote in y2karl's list cites those "many citizens who, having had a choice, might have directed their billions elsewhere". So how exactly do you give people the right to determine where to spend their money? Not by publishing lists of things the government should be spending money on. You could, however, start with a tax cut to put more disposable income in the hands of the people...
posted by JParker at 1:47 AM on May 31, 2003