Mr. Obama is proposing to create or expand no fewer than seven [tax] credits for individuals:
A $500 tax credit ($1,000 a couple) to “make work pay” that phases out at income of $75,000 for individuals and $150,000 per couple.
A $4,000 tax credit for college tuition.
A 10% mortgage interest tax credit (on top of the existing mortgage interest deduction and other housing subsidies).
A “savings” tax credit of 50% up to $1,000.
An expansion of the earned-income tax credit that would allow single workers to receive as much as $555 a year, up from $175 now, and give these workers up to $1,110 if they are paying child support.
A child care credit of 50% up to $6,000 of expenses a year.
A “clean car” tax credit of up to $7,000 on the purchase of certain vehicles.
Here’s the political catch. All but the clean car credit would be “refundable,” which is Washington-speak for the fact that you can receive these checks even if you have no income-tax liability. In other words, they are an income transfer — a federal check — from taxpayers to nontaxpayers.
He also wants to remove the cap on Social Security withholding. Right now, once a person makes around $100,000, the Social Security withholding out of the paycheck stops. Whether payroll deductions that one never sees again constitute a tax is a matter of definition, though the money goes right into the federal stash since there isn’t a social security lockbox. One could make the case that this needs to happen to save Social Security. At any rate, contrary to Obama’s claims, this will amount to a big tax on a lot of people making less than $250,000.