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H.R. 8 Leaves No Millionaire Behind but Ends Tax Cuts for a Third of Families with Children

H.R. 8, introduced by Rep. Dave Camp (R-MI) would extend the Bush-era income tax cuts for the richest two percent of Americans (those with income above $250,000 for a couple, $200,000 for an individual) and extend the 2010 estate tax cuts for the richest 0.3 percent (estates over $7 million per couple).  At the same time, H.R. 8 would end tax cuts for low- and moderate income families enacted as part of the American Recovery and Reinvestment Act of 2009.

Under H.R. 8, no millionaire would lose a penny of tax cuts[1] - worth an average of $160,000 next year.[2]

BUT:

Over one-third (37 percent) of all families with children and nearly three-quarters (74 percent) of low-income families with children would lose tax benefits next year.[3]

25 million middle- and lower-income families would lose tax benefits, including:

  • 12 million who would lose the expansion of the Child Tax Credit, an average of $800 per family. A single mom with two children who works full-time at minimum wage and makes $14,500 per year would lose $1,545 next year because H.R. 8 ends the improvements in the Child Tax Credit.
  • 11 million who would lose the American Opportunity Tax Credit for college expenses,an average of $1,100 per family.
  • 6 million who would lose improvements in the Earned Income Tax Credit (expanded marriage penalty relief and the increase for families with three or more children), an average of $500 per family.[4]

In contrast, H.R. 15, introduced by House Democratic leaders, would end tax cuts for the richest two percent while extending the Bush-era tax cuts on income up to $250,000 per couple ($200,000 for a single taxpayer) and extending the tax cuts for working families in the American Recovery and Reinvestment Act.

 




[1] Tax policy Center, Table T12-0165, summary table, http://taxpolicycenter.org/numbers/displayatab.cfm?Docid=3456&DocTypeID=2.

[2] National Economic Council, The President’s Proposal to Extend the Middle Class Tax Cuts (July 2012), http://www.whitehouse.gov/sites/default/files/uploads/middleclassreport_7_24_2012.pdf

[3] Tax Policy Center, Table T12-0165, Detail Table:  Tax Units with Children, http://taxpolicycenter.org/numbers/displayatab.cfm?Docid=3456&DocTypeID=2.  Low-income families are defined as those in the bottom income quintile, with average incomes of $17,400.

[4] National Economic Council, supra note 2.  Total exceeds 25 million because some families would lose benefits from more than one credit.