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Posted: 10/4/2004 8:10:24 PM EST
The Dems always talk about tax credits and hate tax cuts. I get the cuts but I never seem to be on the list for a credit.
Someone please splain the difference to me.
Link Posted: 10/4/2004 8:14:03 PM EST
Get on the Welfare.


Then let me know how you did it
Link Posted: 10/4/2004 8:14:56 PM EST
Link Posted: 10/4/2004 8:17:02 PM EST

Originally Posted By Lightning_P38:
You are not on welfare, you are not a single mother (single fathers don't rate), and you are not from a oppressed enough minority, you are not as equal as other animals, therefore you should be happy you have anything left after taxes you ungrateful pig!



Stop it, you'll make me cry.


Really though, explain to me how a tax credit works. I dont get it.
Link Posted: 10/4/2004 8:20:04 PM EST
[Last Edit: 10/4/2004 8:21:11 PM EST by Lightning_P38]
Link Posted: 10/4/2004 8:23:42 PM EST
Tax "cuts" can come in various forms. Examples:

1. Reduction in marginal tax rates, such as reducing the rate on capital gains from 28% to 20%, then 15%. You pay less tax on the same amount of income.

2. Expansion of the tax brackets, where more income is taxed at a lower rate. For example, instead of having the first $30,000 taxed at 15%, and anything over that is taxed at 25%, it goes up to $40,000 at 15%, then 25% over that. So, if you made $40,000 taxable, the first example would cost you $7k, (30,000 x .15 = 4500, plus 10,000 x .25 = 2500, total tax of $7,000.), the second would only cost you $6k in tax (40,000 x .15). You pay less tax on the same amount of income.

3. Giving certain income special tax treatment, such as dividends. Dividends used to be considered regular income, taxable up to the old 39.6% rate, now certain dividends are special, and taxed at a maximum of 15%.

Tax credits are different - a direct reduction in your tax liability. Examples:

1. Child tax credit. You get a $1000 reduction in your tax liability for each qualifying child. If you owed $9,000 before the child tax credit, and had 3 kids of the proper age, you get a $3000 credit, and therefore only owe $6000.

2. Disabled access credit. You spend $10,000 to install a handicap access ramp to your business. You get a $5000 tax credit that directly reduces any tax you owe.

3. Earned income tax credit. Poor people who work are given a credit based on how many kids they have and how much they made. This give away reduces their tax liability, usually to zero and the balance is refundable, up to nearly $4000 a year. This is to pretend that the Congress did something about people on welfare.
Link Posted: 10/4/2004 8:24:54 PM EST
[Last Edit: 10/4/2004 8:25:15 PM EST by Lightning_P38]
Link Posted: 10/4/2004 8:26:07 PM EST

Originally Posted By Lightning_P38:
Like I said, chicken bones and magic incantations. And tea leaves, can't forget the tea leaves.




When you get section 8 you the flush those chicken bones down the toilet, just because you can.
Link Posted: 10/4/2004 8:31:12 PM EST
Link Posted: 10/4/2004 8:31:33 PM EST

3. Earned income tax credit. Poor people who work are given a credit based on how many kids they have and how much they made. This give away reduces their tax liability, usually to zero and the balance is refundable, up to nearly $4000 a year. This is to pretend that the Congress did something about people on welfare.




I'm not quite sure I get this one. I'm not stupid, just incredulous. Can you explain?
They get money back they didnt pay in?
Link Posted: 10/4/2004 8:34:18 PM EST
Link Posted: 10/4/2004 8:37:42 PM EST

Originally Posted By captainpooby:

3. Earned income tax credit. Poor people who work are given a credit based on how many kids they have and how much they made. This give away reduces their tax liability, usually to zero and the balance is refundable, up to nearly $4000 a year. This is to pretend that the Congress did something about people on welfare.




I'm not quite sure I get this one. I'm not stupid, just incredulous. Can you explain?
They get money back they didnt pay in?



You understand it perfectly. It's a giveaway. They took money from "welfare payments" and made it a "tax credit." Same thing, different name.
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