Tax credits

There is a difference between a tax deduction and a refundable tax credit. In order to take advantage of a tax deduction you must owe taxes and this eliminate the lowest one half of wage earners because they pay no income tax. If you want to help the low income group the child tax credit it the way to go. If the credit is $2,000 per child and this low income family has two children the government sends them a check for $4,000. This credit is not only available to low income families but to families earning up to $400,000 per year. The key word is refundable as some tax credits are not refundable and the recipients must owe tax before they are eligible for the credit. This is a good way to narrow the wealth gap.