Category Archives: Taxes

Even on Child Care, Donald Trump has to help wealthy people the most

I have an op-ed in US News that digs into Donald Trump’s new child care proposal. The details are sketchy and seem to change by the minute, but I did my best to run some numbers on this. Based on the most generous assumptions I could use, Trump’s plan will not make child care affordable for low- and middle-income families (HHS says child care costs above 10% are unaffordable), but it will be a nice windfall for richer households that get the most benefit.

Even after deducting $18,000 in child care costs under Trump’s proposal and claiming the existing Child and Dependent Care Credit, a typical family making about $62,000 with an infant and a preschooler would still need to pay 23 percent of their income to place their kids in a child care center – not even close to affordable. Even if this family has just one infant and pays $10,000 for a child care center, child care costs would still consume 13 percent of their income. But it gets even worse: a tax break that arrives the following year at tax time will not make ends meet for families who need to pay for child care up front.

 Low-wage workers fare even worse under Trump’s plan. Since these families will not benefit from Trump’s tax deduction, Trump has proposed a rebate worth up to $1,200 per family. But this is not nearly enough to make child care affordable for these families. Even assuming that a family with two parents working at minimum wage gets the full $1,200, they would still need to spend 55 percent of their income to place an infant and preschooler in child care centers. The same family would still need to spend 27 percent of their income if they only need child care for the infant.

By the way, it now looks like the minimum wage family in my example only gets a rebate of about $600, not the full $1200. So it’s even worse. The full column is at US News.

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My Initial Review of the Republican Tax Plan

From my new column at ThinkProgress:

The tax reform legislation introduced by House Ways and Means Committee Chairman Dave Camp (R-MI) on Wednesday includes many good ideas, but unfortunately remains deeply committed to failed trickle-down economic theories. Chairman Camp’s bill would deliver a big corporate tax cut, although he uses budget gimmicks to hide this aspect of his bill. At the same time, it slashes an anti-poverty program that conservatives claim to support as an alternative to raising the minimum wage.

Read the rest here.

 

The More Things Change….

Signing of the Declaration of Independence, by John Trumbull. (Wikimedia Commons)

Signing of the Declaration of Independence, by John Trumbull. (Wikimedia Commons)

It’s well known that the American Revolution started as a revolt against taxes levied on colonists by a government in which they lacked representation. Lesser known is that the United States of America was constantly on the brink of bankruptcy during the Revolutionary War and its aftermath. The Continental Congress repeatedly failed to get the unanimous support it needed from all thirteen states to raise anywhere close to the taxes it required to support its army, leaving the new country dependent on foreign loans.

Super Tax Breaks

IRS SealThere are tax breaks, and there are tax breaks. It’s one thing to get an income tax cut – there are lots of ways to do that. Getting a payroll tax cut is a bit more special, and there are only a handful of tax breaks that are up to that task. Continue reading

IRS Scrutiny of Tea Party is Wrong, and Highlights Problems with Vague Rules

IRS SealThe news that IRS officials were subjecting Tea Party groups applying for tax exempt status to extra scrutiny is genuinely disturbing. For those on the left who disagree, imagine President Bush’s IRS investigating liberal groups in the run-up to the 2004 election. This should be investigated, and lessons should be learned to stop this from happening in the future.

Continue reading

Talking Points Don’t Equal Good Policy: The Federal Employee Tax Accountability Act

The House celebrated tax day last month by considering the Federal Employee Tax Accountability Act, which cracks down on federal employees who aren’t paying their taxes. Basically, if the IRS files a public lien on a federal employee for a tax debt, they would be fired, and people with tax liens would be ineligible for federal employment. When our country is running large budget deficits, going after people who aren’t paying taxes to support the government they work for seems like a no-brainer.

Except it turns out the Federal Employee Tax Accountability Act “would have a negligible effect on revenues,” according to the nonpartisan Congressional Budget Office. That’s probably because if the IRS has a lien on someone, they’ve already discovered the tax delinquency and are aggressively collecting on it. Also, if someone owes money, it helps if they have a way to pay. Like their job. It’s a shame we fired them.

The CBO did make clear that the law would have some effect on the federal budget. It would cost $1 million in 2014 for agencies to implement the new rules. That’s not a lot of money in the context of the federal budget, but it’s probably more than the government should be spending to needlessly antagonize their workforce.