Giving Families Credit Where Credit Is Due
By Ken Blackwell
Monday, April 2, 2007
Every year right after Christmas millions of Americans get a little gift
from the Internal Revenue Service in their mailbox. It's their 1040
income tax booklet, and every year, sadly, this unsolicited present from
the IRS gets a little heftier. This year the growth of the booklet was
especially noticeable; instead of a saddle-stitched binding with staples
holding a few dozen pages together, the 2006 Federal Income Tax booklet
has a glued spine just like the Sears catalog.
The difference is that this catalog is ordering something from you.
What it's ordering is a record take of more than $1 trillion in
individual income tax revenue. Revenue to the U.S. Treasury from
individuals was up a whopping 12.6 percent in fiscal year 2006. Did you
receive a 12.6 percent salary increase last year?
To make matters worse, chances are that the typical American will not be
calculating this record tax liability on his or her own. In what may be
the most telling tax stat of our time, some 60 percent of Americans now
use the services of a paid specialist to prepare their return. When a
majority of citizens no longer can -- or try to -- interpret the tax
code and figure their own tax bill, we have passed into bureaucratic
Nirvana. Government by guru has become our national fiscal religion.
Right about this time, what comes next for most advocates of tax
simplicity like me is a renewed call for drastic overhaul of the U.S.
tax code. This year advocates have some overseas reinforcement for this
view. The World Economic Forum's report on global competitiveness found
that the inefficiency of the U.S. tax system ranks it 107th among the
117 nations included in its analysis.
Earlier this month a fresh effort was initiated in Congress to restore
reason to our nation's tax policies. Former Majority Leader Dick Armey
is the chairman of Freedom Works, a group dedicated to smaller
government and lower taxes. In conjunction with the Republican Study
Committee, the group held a rally last week on Capitol Hill to drum up
support for the Taxpayer Bill of Rights.
Like the seed dropped on hard ground, however, this Bill of Rights is
unlikely to take root in a Congress that seems more bent every day on
massive tax hikes. The prime targets for liberal Democrats on Capital
Hill are the child tax credit and marriage protection relief, measures
that, thanks to the insistence of these same liberals, are set to
partially or completely expire after 2010.
The case of the child tax credit particularly illustrates the problem.
A $500-per-child credit for each child 17 years of age and under was
dubbed the "Crown Jewel" of the Republican Contract with America in
1994. The GOP victory in House races that year paved the way for
adoption of the credit, which, in truth, had enjoyed intellectual and
political support from key figures in both major parties. The popular
credit finally passed in 1997, and Congress doubled it in 2001 at
President Bush's insistence.
The credit now returns an estimated $46 billion to families with
children every year. That's money that can help pay for braces, buy a
bicycle, or purchase a math tutoring program for the family computer.
It might even finance an ice cream cone or a trip to the zoo. The point
is, it's the family's money, and parents, and nations, make wise
investments when they invest in kids.
The Senate budget bill extends this credit, and marriage penalty relief,
for two years. Acting after the Senate, Rep. Charlie Rangel (D-N.Y.)
and the House Ways and Means Committee have rejected an extension of
both of these credits, and their version of the budget bill will tap
families and businesses for an extra $392 billion over the next five
years. Defenders of these huge hikes seize on the expiration date for
President Bush's 2001 reforms and assert that they are not new taxes at
all.
Nonsense. The Democratic Congress is reneging on a promise on which
families have come to rely. A hike is a hike is a hike. We should
remember that any tax reduction is a form of tax simplification.
Government takes less, and the American people keep more. Then families
can order more of what they want from a real store catalogue.
Mr. Blackwell, contributing editor of Townhall.com, is a senior fellow at the Family Research Council, the American Civil Rights Union and the Buckeye Institute in Ohio.
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