Republican presidential candidate George W. Bush has just put some real teeth into compassionate conservatism with his plan designed to help low-income working families. His program would:
* Create new incentives for work by sharply lowering the income tax on low-income workers.
* Provide access to affordable health care with a tax credit for low-income workers.
* Expand home ownership by adjusting the existing rules of Section 8 rental subsidy housing program.
* Increase the personal savings of low-income workers with a tax credit for banks to match up to $300 in savings.
This initiative would remove barriers for low-income Americans beginning to climb up the economic ladder. Millions of Americans have moved off the welfare rolls into the work force. Now we need to make it possible for them to achieve real economic independence.
The crown jewel of Bush's "new prosperity initiative" is his tax-cut plan. What he proposes is so simple that you wonder why it has not been proposed before: The lower your taxable income, the higher the percentage of your tax cut.
Today, low-income workers face an unconscionably high effective tax rate on earned income. Add up income tax, the phasing out of the earned income tax credit and the Social Security tax, and you get a 44% tax rate on additional income.
Bush's tax cut reduces the income tax rate by one-third on low incomes, reduces all other tax rates by a smaller amount and doubles the child tax credit from $500 to $1,000. The result? Every working American gets a tax cut. If you have children, you get a bigger tax cut. And the lower your taxable income, the higher your tax cut.
Don't take my word for it. Bush has put the plan on his Web site, www.georgewbush.com. Click on the "Bush Tax Calculator," which can be found on the lower left side of the screen. The tax calculator will figure your income tax cut.
For example, if you are married with two children and earn $30,000 a year, you now owe $770 in taxes; under the Bush plan you get a 100% cut. Make $36,000 and the $1,670 you now owe is cut by 95%. At $40,000, the tax cut is still 70%, and even at $50,000 of income, the family gets a 42% tax cut. The highest earners would have their rates cut about 16%.
For fun you might try Al Gore's Web site, www.algore2000.com, and see how much of a tax cut you get under his plan (I tried and couldn't find any).
