Fixing the Parent Tax Penalty
What is the “Parent Tax Penalty”?
The parent tax penalty is a
glitch in the federal tax code that forces parents to contribute to senior entitlement programs not once, but twice.
First, they pay their taxes
– just like everyone else. They then incur the costs of raising their children – who of course grow up to become the next generation of
taxpayers. Currently, the tax code does not account for parents’ investment in their children, and thus imposes an unfair “parent tax
For example, two couples, - one with children, one without – who earn identical incomes will pay the same
amount in payroll taxes as their contributions to Social Security and Medicare. But the couple with kids will spend over $200,000, per child, raising the children who will eventually pay for the retirement benefits of both couples.
Since both couples receive
identical benefits, there is unequal treatment of parents who made the investment to raise the future taxpayers that keep the system funded.
Hence, the parent tax penalty. Expanding the Child Tax Credit would be a good first step forward in eliminating this discrimination.
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Live Town Hall on
Join Senator Mike Lee
in an upcoming Access Live event on October 25th at 5:00 p.m. MT. Last week the Senate took the first step towards providing tax relief for
hardworking American families by expanding the child tax credit. He looks forward to discussing this issue and answering any other questions you have.
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forward to having you join me for this event.