Mr. FILNER: Mr. Speaker, the "Tax Cut for the Rest of Us" Act of 2006 (H.R. 5257) transforms the standard income tax deduction into a refundable standard tax credit. Doing so will not only simplify the tax code, but put more money into the pockets of poor Americans.
For 25 years, refundable tax credits -- such as the Earned Income Tax Credit and the additional child tax credit -- have proven to be simple, effective ways to help the poor.
The logical next step is to transform the standard deduction and personal exemptions into a refundable standard tax credit (STC) of $2,000 for each adult and $1,000 for each child. The STC will provide all the poor with a small but badly needed tax credit, and give a tax cut to virtually everyone who chooses not to itemize their deductions.
Transforming the standard deduction into a refundable tax credit will not eliminate poverty, but it will be an enormous benefit to the poor who were completely overlooked by the Bush tax cuts. The poor pay sales taxes, property taxes, and many other taxes, but because they do not pay very much in income tax, they have little to gain from tax simplification unless it includes something like the STC.
Transforming the standard deduction into a standard tax credit will give a tax cut to those who need it most. Now is the time to pass a "Tax Cut for the Rest of Us."
Here is a discussion draft of the Bill. The preamble of the HR 5257 reads, "To amend the Internal Revenue Code of 1986 to provide a basic income guarantee in the form of a refundable tax credit for taxpayers who do not itemize deductions."
The proposal transforms the current standard income tax deduction into a tax credit of $2000 per adult and $1000 per child. This would provide a refundable tax credit to literally everyone who files an income tax return, even if a person has no private income. The Earned Income Tax Credit provides a small refundable tax credit, but only to those who have some earned income. This proposed BIG bill would, on the contrary, allow low-income Americans to receive up to $2000 in cash as a tax credit, as well as everybody else to receive the same amount off the taxes they pay.
The Bill is based on a proposal written by Al Sheahen and Karl Widerquist which was presented at the 2005 USBIG Congress (at which I also delivered a paper, as it happens). According to the USBIG release Al Sheahen has been working with Congressman Filner for nearly two years to get this Bill introduced. It is not exactly surprising to note that so far the Bill lacks a Republican co-sponsor, and that in the current Republican controlled session this makes the Bill's propsects dim at best.
Sheahen suggests that the Bill would likely have a much better chance after congressional elections in November. I certainly hope he is right about that -- right that reason will prevail and Americans will vote to cast out the Republican "Rubber Stamp" Congressional culture of corruption, right that election tampering and fraud will be circumvented this time around so that the will of the American people will actually be respected even when the outcome fails to favor the Republicans, and right that a Democratic Congress will actually reflect the dedication to fairness, the four freedoms, and democratic commonwealth that will have put them in office.