As we contemplate doing out taxes again, this quick reminder: The earned income tax credit has been reduced, thus increasing taxes on those receiving it. It's that simple.
But Republicans have found a way to magically claim that it’s not a tax increase. To them, its welfare, since any money they receive is not money they have earned. So it’s nothing like a tax increase on actual wages.
No, it doesn’t explain away increasing taxes on the poor, but it does justify the broken pledge in a way that hits all their hot buttons.
PostCrescent: Wisconsin (was) among only a handful of states that will effectively raise taxes on their poorest residents in 2012, according to a recent study by the Center on Budget and Policy Priorities, a nonprofit think tank. Since 1989, Wisconsin has offered low-income families with children a so-called earned income tax credit, which offsets Social Security taxes and lowers poor families' tax liability.
Here’s how it went up:
The 2011-2013 state budget reduces the percentages for families with two or more children, which the state Legislative Fiscal Bureau considers a net tax increase.
Starting next year, low-income families with two children will be capped at 11 percent of the maximum federal credit, or $562, down from $716.
Families with three or more children will be limited to 34 percent, or $1,955, down from $2,473.
The Wisconsin Council on Children and Families estimates a two-parent family of four that earns $32,500 a year would see an $81 cut in their tax credit next year.
It’s a tax increase.