New Tax Law Raises Tax Rates on Children
Posted by Robert Louis on 31 May 2007 | Tagged as: Income Tax
In recent years, several tax laws have reduced federal income tax rates and added to the ability to set aside amounts for retirement in a tax-advantaged way. At the same time, other changes in tax law, by limiting deductions, for example, have actually increased tax burdens. And, the inattention to the growth of the alternative minimum tax has resulted in millions of people having to pay that additional tax. A tax bill just passed by Congress, that will shortly be signed by the President, provides another example of this. The kiddie tax, which taxes children, up to a certain age, at the same rates paid by their parents on much higher income, has been amended to increase the age at which the higher tax rates apply to age 18, and to age 24 if the child is a student. So tax benefits for others are paid for by increasing taxes on children, most of whom won’t be able to vote out the politicians who increased their taxes.