WASHINGTON – If President Obama and congressional leaders cannot come to an agreement on tax code changes in the coming weeks, some 562,000 low- and middle-class families in Massachusetts would lose access to the child tax credit, according to a new White House analysis.
Losing the tax credit would cost them an average of $1,000 annually in just one of the many ways that the looming austerity crisis would impact Massachusetts residents and businesses if politicians in Washington cannot come to terms on a deal before Jan. 1.
Some 217,000 families in the Bay State would no longer get assistance from the federal government in paying for college, and small businesses in the state would only be able to claim deductions of $25,000 on new investments – one-tenth the $250,000 they can claim now.
The figures were put together by President Obama’s Council of Economic Advisers, and are part of an ongoing effort by the White House to push their case for their policies. The report this week focuses on a series of tax credits that are set to expire without congressional action.
The value of the child tax credit, for example, was broadened and college tuition credits were increased as part of President Obama’s 2009 stimulus legislation. Congress reauthorized those credits in 2010, but they are set to expire at the end of this year.
Most of the debate has been focused on tax rates. Obama wants the tax rate to stay the same on income less than $250,000, but he wants the rates to increase – to levels where they were about a decade ago – on any income greater than that. Republicans want to retain current rates for everyone.
But if Congress doesn’t act, rates will increase for everyone.