I’m going to expand on a point I made in a previous post. Among other things, Ron Paul proposes the following:
Help parents better educate their children by providing parents with a $5,000 per child tax credit for tutors, books, computers, and other K-12 related educational needs.
Provide tax credits and deductions for all medical expenses.
But what does he mean by a tax credit (or tax deduction)? Isn’t a tax credit an offset for something you pay taxes on?
Does he mean parents currently pay a federal child tax? Does he mean parents currently pay federal taxes for tutors, books, computers? Does he mean patients currently pay federal taxes on all medical expenses?
Or does he just mean that out of the sum total that a family pays in Federal taxes, a designated amount will be credited to the family for educational expenses–even if there’s no connection between what items they are taxed on and what items are credited.
Take a family of seven (mother, father, and five underage kids). Under Paul’s proposal, that family would receive a child tax credit of $25,000 per annum. Notice that this is a fixed amount. It’s not correlated to how much the parental wage-earner(s) actually pay(s) in federal taxes. It’s not a direct dollar-for-dollar offset.
Same thing with the tax credit for all medical expenses. It’s not prorated according to how much the patient pays in Federal taxes.
Indeed, isn’t that the difference between a tax credit and a tax deduction? The tax credit is the same regardless of the tax bracket.
But if they are taking more out of the system than they are paying into the system, then isn’t a “child tax credit” just a euphemism for income redistribution? Manipulating the tax code to transfer wealth?
After all, that’s coming out of somebody’s pocket. Someone is taking up the slack. Someone (else) is subsidizing that family. But not the family receiving the child tax credit. Not if the tax credit exceeds what they pay in Federal taxes. (Same thing with patients.)
What if a single mother deliberately has kids out of wedlock to collect a tax credit for each child? Isn’t Paul’s proposal a recipe for welfare queens?
What about homosexual “couples” who adopt kids or have kids via reproductive technologies. Do they get a child tax credit?
What about junkies, or chain smokers, or the super morbidly obese? Do they get tax credits and tax refunds on all their medical expenses? Isn't that a safety-net for high-risk behavior? Who is footing the bill?