Almost Missed This One
The House would not only make permanent the $1,000-per-child tax credit enacted as part of the 2001 tax cut but would dramatically increase the income limits for eligibility. Currently, married families with incomes of up to $110,000 receive the full credit; the bill would more than double the income ceiling, to $250,000. Under existing law, families with two children and incomes up to $149,000 receive a partial tax credit; the bill would make that partial credit available to families with two children and income of between $250,000 and $289,000; families with three children would be entitled to the partial credit up to an income of $309,000.
In 2002, 5% of households (about 5.5 million households) earned more than $150,000/year, so there are somewhere probably around 10 million households earning between $110,000 and $250,0000. In the grand scheme of things, this proposal wouldn’t cost all that much, roughly $10 billion (which would only increase the federal deficit by under 2%.)
At the same time, $1,000 really doesn’t do much for families earning more than $110,000. Certainly, it would be nice to have even for these relatively wealthy families, but it’s not going to really affect them in any significant way. For comparison, ask yourself how you would react to a raise of less than 1%.
So I can only conclude that this proposal is just a matter of principle: we need to take another 8 or 10 billion dollars from everybody (i.e., the people responsible for paying the deficit) and give it to the top 5%. Why? Not to make the economy or the lives of the wealthy better in any meaningful sense, but just because we can. At least, so say House Republicans.
P.S. Technically speaking, of the 5.5 million households in the top 5%, 710,000 have a head of household over 65 and so probably don’t have dependant children. And some portion of the under 65 households also lack dependants. So the total number of beneficiaries is probably well under 10 million, so the cost of this proposal is probably under $10b. But the point remains true: it’s hard to see this as anything other than a principled transfer of 5 to 10 billion dollars — from everybody, to the top 5% or so.
In fact, upon inspection, the Post story says the proposal would cost “$69 billion through 2014,” which is about $7b per year.