Today is Tax Day.
As Americans file their taxes it's worth remembering that the tax code promotes inequality in part by allowing the wealthiest Americans to take advantage of loopholes, and pay a lower rate on capital gains and interest income.
Thankfully Congressman Joaquin Castro has introduced the “Cut Taxes for the Middle Class Act” which would restore eight tax cuts that expired in 2013. These cuts directly benefit working families, as well as promote goals such as achieving higher education and helping veterans.
Find out what the act does below the jump!Tge Cut Taxes for the Middle Class Act, aka H.R. 4469, would restore tax fairness for America's middle class families by extending 8 tax cuts that expired at the end of 2013.
Those cuts helped Americans recover from the economic downturn, enabled individuals to seek higher education, and rewarded businesses that hire low-income folks and veterans.
Congressman Castro released the following statement on the Act to BOR:
“Tax Day should serve as a reminder for Congress to work together on tax reforms that bolster hard-working Americans and spur economic growth. We must reform the tax code to support the creation and retention of good-paying American jobs. I'm pleased to introduce legislation that ensures our tax system protects hard-working Americans. I'm hopeful that Congress will extend these common-sense tax cuts this year to put money back in the pocket of middle class Texans and continue to strengthen our nation's economy.”
Congress must act before the end of 2014 in order for these tax cuts to apply during the next tax season.
The tax cuts in Congressman Castro's Act are as follows:
Deduction for state and local general sales taxes
–This deduction will benefit taxpayers working in states that only have sales taxes and no income tax. Texas is one of those states. It may give a larger deduction to any taxpayer who paid more in sales taxes than income taxes.
–About 11 million filers claimed a total of $17 billion in state and local sales tax deductions in 2011. Texas is one of the top ten states for federal deduction for state and local sales taxes paid with a claim rate of 20.2% and an average deduction of $383.00 in 2011.
Deduction for tuition and higher education related expenses
— Students, their spouse or dependents can benefit from a deduction on tuition and related expenses for higher education. Depending on income an individual can deduct up to $4,000 of qualified tuition and related fees.
Deduction for elementary and secondary school teachers expenses
–This provision provides a $250 above-the-line tax deduction for teachers and other school professional for expenses including amounts paid or incurred for book, supplies, computer equipment (including related software and service), and supplementary materials used by the educator in the classroom.
Deduction for businesses that hire low-income folks and veterans
–The Work Opportunity Tax Credit (WOTC) is a credit that benefits employers and job seekers. It is available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment.
–The business qualifies for a direct federal tax savings from $1,200 to $9,600 if an employer hires veterans, SNAP and TANF recipients, young adults in the summertime, those who live in Rural Renewal Counties and Empowerment Zones, and Social Security recipients.
Housing Credit Provisions for Members of the Armed Forces
–This provision ensures that basic housing allowance payments made to military personnel and families are not included in income for determining low-income housing tax credit income eligibility for buildings located in certain areas.
Credit for employers with activated military reservists
— This provision extends a tax credit for eligible small businesses of activated military reservists. This allows a small business employer to take credit for the differential wage payments if their employee is called to active duty with the Armed forces.
Credit for organizations investing in low-income communities
— The New Markets Tax Credit (NMTC) is incentivizes financial institutions to provide capital for economic development in low-income communities. This credit is designed to stimulate and invest in low-income, urban areas to increase development and create more jobs.
Credit for business research and experimentation expenses
— This tax credit benefits businesses that are involved in research and development, which in turn strengthens their business and spurs innovation.
If you would like to take advantage of some or all of these tax cuts for next tax season, consider contacting your representative and urging them to support the Cut Taxes for the Middle Class Act.