Newspaper article St Louis Post-Dispatch (MO)

Middle Class to Pay for Its Tax Cut

Newspaper article St Louis Post-Dispatch (MO)

Middle Class to Pay for Its Tax Cut

Article excerpt

The difference in how President Bill Clinton and Bob Dole propose to treat families with children involves Republican generosity to the wealthy. Working families of modest to moderate means will be the ones financing, via the impact of cuts in federal programs, the goodies for the very comfortable.

According to Dole's people, for a four-person family with two kids under the age of 18 pulling in $35,000 in gross income, the much-trumpeted 15 percent cut in income tax rates over three years would net that family about a dollar a day.

What really would cut the family's taxes is its eligibility for $500 per child credit Dole favors, but which the president has also proposed. That even grand cuts the family's income tax bill at least in half. But according to Clinton's people, for a four-person family with two kids under 18 pulling in $35,000, its income tax bill of around $2,700 under current law also drops by $1,000.

The difference between Clinton and Dole where that all-too-typical family is concerned, however, covers more than the tiny sum of roughly $400 it would get from the Dole rate cut.

Clinton's budget proposal (already scored by the Congressional Budget Office in contrast to the detail-challenged Dole scheme) includes much more savings for average working families. That family, for example, could deduct Individual Retirement Account contributions under the president's proposal that could be withdrawn without penalty to buy a first home, pay education expenses, or meet a serious medical emergency. The family could also deduct up to $10,000 in education or training costs to better itself.

It could also benefit if the kids were older, through Clinton's proposal for a $1,500 tax credit (refundable for the poor) covering the first year of college plus a second year if a B average is maintained. Dole also is proposing expanding IRAs and offering education and training initiatives, but with less impact on families of modest means.

Now switch to family with two kids and an income of $250,000 that includes $20,000 in capital gains. Clinton's contention is that such a family does not need tax relief. Dole's is that it does. …

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