Extend child tax credits and marriage-penalty fixes

Tax compromise includes extensions of child tax credits and marriage-penalty fixes

Updated: Tuesday, December 21st, 2010 | By Angie Drobnic Holan

In the debate over taxes during 2010, both parties agreed that the tax rates for the middle class should be continued. The tax rates, passed during President George W. Bush's administration, had an end-of-the-year expiration date and were set to go up in 2011. That included child tax credits and marriage-penalty fixes.

Yet getting the tax rates continued proved surprisingly contentious. President Barack Obama said Republicans were holding tax cuts for the middle-class "hostage" to get tax rates for higher earners continued. So Obama agreed to continue the current tax rates for everyone, regardless of income. Additionally, Obama won another year of unemployment benefits for workers who qualified, and he won a one-year reduction of Social Security taxes that put 2 percent of pay back into workers' paychecks.

Here, we're rating Obama's promise to extend child tax credits and marriage-penalty fixes. The legislation Obama signed on Dec. 17, 2010, continues those tax measures for everyone for another two years. We'll check back on this promise in 2012, but for now we're rating this Promise Kept.

Sources:

The White House, Fact Sheet on the Framework Agreement on Middle Class Tax Cuts and Unemployment Insurance, Dec. 7, 2010

Thomas, HR 4583

The White House, Press Conference by the President, Dec. 7, 2010

U.S. Senate Finance Committee, S.A.4753: The Reid-McConnell Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010

Obama keeps Bush's child tax credits and marriage penalty fixes

Updated: Thursday, March 5th, 2009 | By Angie Drobnic Holan

President Obama has said he would roll back the Bush tax cuts on higher incomes, meaning $200,000 in income for singles and $250,000 for couples. But he intends to leave in place the Bush tax cuts for everyone who makes less than that.

In the case of this particular promise, the outline for Obama's 2010 budget shows he intends to keep expansions of the child tax credit, as well as adjustments that do away with a marriage penalty for couples who file jointly. These exemptions would phase out for people at higher incomes, who will see hefty rate increases under the Obama plan.

When the tax cuts were first enacted in 2001 and again in 2003, the legislation came with "sunsets," or scheduled expiration dates. Without further action, tax rates will go up for everyone in 2011; at the time it was considered a way to rein in future deficit projections. So new legislation is required to keep in place those current policies, and the budget outline indicates Obama intends to pursue that legislation.

Congress still needs approve Obama's budget, and there will likely be arguments over many things in it. But little opposition is expected to retaining the child credit expansions and marriage penalty fixes. For now, though, we're rating this promise In the Works.

Sources:

Office of Budget and Management, Budget Documents for Fiscal Year 2010 , Feb. 26, 2009