fbpx

OPINION: Even The “tax Cuts” In Democrats’ $3.5 Trillion Plan Are Mostly New Benefit Spending

opinion:-even-the-“tax-cuts”-in-democrats’-$3.5-trillion-plan-are-mostly-new-benefit-spending
Share on facebook
Share on twitter
Share on pinterest

Democrats are fond of saying their massive $3.5 trillion spending bill includes significant “tax cuts.” They are referring to the effects of continuing the expanded child tax credit payments now flowing for the first time on a monthly basis to an estimated 39 million households. When the first monthly checks went out in July, President Biden said it was “one of the largest-ever single tax cuts for families with children.” House Speaker Nancy Pelosi said last week that “If your family needs economic assistance, the Biden [Child] Tax Credit — but it’s the child tax cut, really — is a big middle class cut in taxes.”

The facts say otherwise.

The Joint Committee on Taxation (JCT), Congress’ nonpartisan arbiter of the cost of tax policy, recently released its estimate of the part of the spending plan being rushed through the tax-writing Ways and Means Committee this week. That legislation would generally extend the current-year expansion in the child tax credit through 2025, with more modest expansions continuing after that.

Tax policy is complicated for many reasons, but one is because such “tax credits” frequently include payments to low-income adults who do not owe federal income taxes. The Earned Income Tax Credit is a prominent example, and the Child Tax Credit, significantly expanded for this year, is another. Such payments to those who do not owe federal income taxes are known as “refundable” credits, or in budget terms “outlays” — the same as benefits provided under welfare, Medicaid, food stamps, and similar spending programs. The outlay portions of these tax credits are not “tax cuts” for the simple reason that the payments exceed any taxes the recipient owed in the first place. Put another way, it is impossible to “cut taxes” if you do not owe taxes.

Here are the two relevant parts of the JCT score on the cost of extending the child tax credit expansion, as proposed in the current legislation:

Part 1: 10-year overall cost of the policy: $556 billion

Part 2: Share of that 10-year cost that reflects “outlays”: $421 billion

Source: The Joint Committee on Taxation, Congress of the United States, Estimated Budgetary Effects Of The Revenue Provisions Of Subtitles F, G, H, And J Of The Budget Reconciliation Legislative Recommendations Relating To Infrastructure Financing, Green Energy, Social Safety Net, And Drug Pricing, September 11, 2021.

These figures show that the expansion of the child tax credit included in the $3.5 trillion spending bill is expected to cost taxpayers a staggering $556B over 10 years (part 1). Of that amount, $421 billion (part 2) or nearly 76 percent reflects outlays — that is, new benefit spending that has nothing to do with “tax cuts.”

It is also noteworthy that, while the bulk of the 10-year costs result from expansions through 2025, the additional benefit spending does not end there. After 2025, under current law the value of the child tax credit is slated to drop back to its former $1,000 per child. But Democrats’ policy would continue to provide “full refundability” of that smaller $1,000 credit in 2026 and beyond. Again, that means increased benefit checks to those who do not owe income taxes — including some who don’t work at all. In the last five years of the 10-year window, the overall cost of the proposal is $17.7 billion, but a full 100 percent of that cost is outlays. None of the cost of this policy from 2027 through 2031 is attributable to “tax cuts.” It’s all higher benefit spending directed at those who don’t owe federal income taxes.

The bottom line is that, in the biggest spending bill in American history, the lion’s share of even what supporters tout as “tax cuts” is really spent on old-fashioned government benefit checks. That the checks are coming from the IRS, which has already become America’s number one welfare-paying agency, doesn’t change that.

Even in official Washington that knows little shame, such false advertising is remarkable.

More dWeb.News Opinions: https://dweb.news/category/dweb-news/section-w-words-from-webster-opinions/

Share this post with your friends

Share on facebook
Share on google
Share on twitter
Share on linkedin

Leave a Reply

Do You Want To Boost Your Business?

Send Me Your Press Release and I'll Blast it Out To The World -- It's Free

%d bloggers like this: