Obama budget

For those not familiar with how our income tax system works allow me to explain one aspect. A tax deduction allows you to reduce your taxable income before you calculate your tax. A tax credit allows you to deduct directly from the tax you owe. Obviously a credit is far better than a deduction. One of the most widely used credits is the child tax credit not to be confused with child care credits. This credit is available to couples whose income is less than $110,000 and who have children under the age of 17. This benefit provides a credit of $1,000 per child and pays even if no tax is owed. It is a huge benefit for low income people and last year cost the government 57 billion dollars. President Obama is proposing that this benefit be raised to $3,000 per child and this would be most helpful to the lowest income families. It is not available to families without income, that is, you must be earning wages to qualify. This along with lowering the payroll tax, (social security) is one of the best ways to help low income families but the cost will be $114 billion dollars per year. In addition the President is proposing a 478 billion dollar public works program for things like bridges and highways. This would be paid for by a 14% tax on money held overseas by corporations and they would be forced to bring this money back into the country. Since there is 2 trillion in these accounts this would generate 238 billion in tax revenue and combined with another 240 billion from a gas tax would pay for the works programs. Infrastructure projects help the lower income people but the tax on gas would hurt the poor and low income people. The President is proposing raising the tax rate on capital gains and using that money for a middle class tax rebate and that will help but he plans to increase taxes on cigarettes and that will hurt. While plans like this will meet The Presidents goal of income re-distribution only the public works program will provide good jobs and those are all temporary.