(A publication of Project 21, 777 N. Capitol St NE #803 Washington, D.C. 20001 (202); FAX (301) 498-1301.)
Date of Issue: March 1995
Congressional efforts to relieve the burden on taxpaying families are overdue, say members of the national Advisory Committee of the African-American leadership group Project 21. A $500 per child tax credit is the main component of a tax relief package (which includes provisions allowing the use of IRA (Individual Retirement Account ) contributions for first home purchases, tax relief for caring for elderly relatives, adoption deductions, capital gains tax reductions, etc.) being debated on the House floor this week with a vote expected on April 5. Members of Project 21 believe hardworking, middle-class two-parent Black households are among those suffering the severest consequences of an overtaxing federal government.
"The $500 dollar per child tax credit is insignificant in light of the escalating cost of children," says Theresa Byrd, Project 21 Advisory Committee member and Director of Constituent Relations for Representative Richard Baker (R-LA). "Families are spending more than ever on medical and educational costs for their children, and those that I have spoken to claim that the current deductions are of little help in providing for their families. And they are right. The family tax exemption for families that was worth 42% of an average family's income in 1948 is now worth only 12%. If used wisely, this proposed tax credit could assist a family immediately with such basics as clothing and day care. If invested properly over a period of time, the tax credit could cover a substantial amount of the cost of a college education."
Although he would prefer a cut in the federal income tax rate, Project 21 member and New Jersey business owner Reginald Jones says that a $500 per child tax credit is a good first step to providing relief for taxpayers: "The Congressmen who say now is not a good time to cut taxes are often the same people who never find a bad time to raise them. With all the talk by some politicians of struggling families, and increasing numbers of children in poverty, one might assume that a proposal to grant tax relief to families with children would be embraced by all sides. But, unfortunately, some politicians aren't on the side of overtaxed families."
Democrats opposing the House Republican proposal for a $500 per child tax credit had recently been joined in opposition by some House Republicans until House Republican leaders agreed to tie any tax relief to a balanced budget plan. Criticisms of the tax credit proposed by House Republican as part of their "Contract with America" are: 1) the proposal allows families with incomes as high as $200,000 to receive a tax credit; 2) substantial deficit reduction should come before any tax cuts.
Supporters of the House Republican proposal for tax relief counter critics of their plan by noting that the House Republican deficit reduction plan, if enacted, would cut spending by $100 billion over five years while President Clinton's plan would increase spending by $422 billion over five years. In addition, tax relief proponents argue that because of a recent compromise negotiated between House Republican leaders and Republican deficit hawks, no tax relief will go into effect unless a balanced budget plan is enacted this year. Furthermore, polls have continually demonstrated that an overwhelming number of Americans think they are taxed too much, and that many Americans support a cut in federal income taxes to help relieve that burden. Supporters of tax relief often point out that the average family in the 1950s paid 4% of their income in federal taxes compared to 24% today.
"The 104th Congress' emphasis on cutting taxes is a welcome departure from Washington's usual reflex: to raise taxes early, often and as high as the sky," says Deroy Murdock, President of the marketing and media consulting firm Loud & Clear Communications. Also a Project 21 Advisory Committee member, Murdock continues, "The Contract with America's $500 per child tax credit will allow American families to keep more of the fruits of their labors rather than surrender them to the IRS. While in itself that is a huge plus, any serious proposal for tax relief must include reductions in tax rates, not just credits for one's children. The opponents of tax cuts, meanwhile, say that Washington cannot afford to slash taxes until the deficit is reduced. Nonsense. This money is not Congress' to dole out as it pleases. Congress should cut the citizens' taxes to levels low enough to stimulate a decelerating economy. Entitlements, corporate welfare programs, pork barrel projects and the bureaucracies that manage them then should be reduced to match the level of revenues the Treasury has on hand. That's the difference between a government that enslaves its subjects and one that serves the people."
Project 21 is an African-American leadership group dedicated to presenting a conservative viewpoint not traditionally echoed by the nation's civil rights establishment. For more information, please contact Project 21 at (202) 507-6398 or [email protected].
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