Saturday, June 14, 2003

The House and Senate, this past week, past a bill extending the child tax credit to low income households.

  • Article

  • The theory behind this "Tax credit" is that even though these homes do not pay income taxes, they do pay payroll taxes like Social Security and State taxes, therefore they still require a break. However, if one considers the nature of payroll taxes, the ludicrous nature of this theory soon becomes evident. Payroll taxes are used to pay for benefits people already receive or will receive in the future. So by grating a "credit" based on these taxes, the Federal government is in essence GIVING a double benefit to those who fit in the classification in which the bills cover. Furthermore, this argument disregards the fact that these households are already eligible to receive the $600 per child tax credit in addition to up to a $3200 earned income tax credit. Keep in mind, that all this is received by people who do not pay income taxes. The true motivation behind this credit is redistribution of wealth pain and simple. As for the State tax argument, it seems to disregard the basic characteristics of republican government in that the state operates as a separate entity from the Federal government. This attitude is of no surprise given the fact that, increasingly, the state governments look to the federal government to solve traditionally state problems. If a bill were to have been pasted granting individuals who earn less than $26,000 a $400 per child check and required no more from the recipients, the conservatives and fiscally minded moderates would be in a uproar. This bill in essence does the same thing. It is using the tax code as a vehicle for a welfare program that may not have been supported if the true motivation behind it was reveled. The tax code should remain as a means to gain revenue for the Federal government and not a vehicle for social engineering.