{ "id": "RL33755", "type": "CRS Report", "typeId": "REPORTS", "number": "RL33755", "active": true, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 587512, "date": "2016-11-23", "retrieved": "2020-01-02T15:04:31.618851", "title": "Federal Income Tax Treatment of the Family", "summary": "Individual income tax provisions have shifted over time, first in increasing the burden on larger families, and then in decreasing it. These shifts were caused by changing tax code features: personal exemptions, standard and itemized deductions, rates, the earned income credit (EIC), the child credit, and other standard structural aspects of the tax. Some of these features reflect changes made by the 2001 Bush tax cuts, which were extended for an additional two years by P.L. 111-312 and largely made permanent by the American Taxpayer Relief Act (P.L. 112-240). The most recent legislative change was making the temporary provisions liberalizing the child credit and earned income credit enacted in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5), and subsequently extended, permanent. These provisions were made permanent at the end of 2015 by the Protecting Americans from Tax Hikes (PATH) Act (P.L. 114-113). \nTaxes as a share of income have decreased for lower-income families and to a lesser extent for middle-income families, while remaining at approximately the same level for higher-income families. \nWhile several standards may be considered in determining equitable treatment of families over family type and size, a standard approach is based on ability to pay, so that large families with the same income as small ones pay less tax. Based on this standard, the analysis of equity across families suggests that families with children are paying lower rates of tax (or receiving larger negative tax rates) than single individuals and married couples at lower and middle incomes. However, families with children are being taxed more heavily at higher-income levels. At the lowest income levels, the EIC provides the largest tax subsidies to families with three children. The smallest subsidies go to childless couples. At middle-income levels, families with many children will have the most favorable treatment, due to the effect of the child credit, which has a very large effect relative to tax liability. At higher-income levels, large families are penalized because the adjustments for children, such as personal exemptions and child credits, are too small or are phased out, while graduated rates cause larger families that need more income to maintain a given living standard to pay higher taxes. Tax rates are more variable at lower-income levels. At all but the lowest and highest income levels, singles pay higher taxes than married couples.\nThe analysis of the marriage penalty indicates that marriage penalties have largely been eliminated for those without children throughout the middle-income range, but this change has inevitably expanded marriage bonuses. Marriage penalties remain at the high and low income levels and could also apply to those with children, where the penalty or bonus is not very well defined. But by and large, the current system is likely to encourage rather than discourage marriage and favors married couples over singles.\nThe analysis of equity across families suggests that increases in earned income tax credits for those without children would lead to more equal treatment based on the ability to pay approach, while full refundability of the child credit would exacerbate inequalities. At the higher end of the scale, eliminating phase outs of provisions that differentiate across families would probably lead to more equitable treatment, and limiting or repealing the alternative minimum tax would reduce the burden of taxes on families with children at upper middle-income levels as well as marriage penalties.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/RL33755", "sha1": "d8b2ac59d58e3482a54a117da7febe242916435d", "filename": "files/20161123_RL33755_d8b2ac59d58e3482a54a117da7febe242916435d.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/RL33755", "sha1": "692245741bc548e9fdc8e47633c0233f51ea47d4", "filename": "files/20161123_RL33755_692245741bc548e9fdc8e47633c0233f51ea47d4.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4799, "name": "Individual Tax" }, { "source": "IBCList", "id": 4824, "name": "Education, Family, & Housing Tax Policy" } ] }, { "source": "EveryCRSReport.com", "id": 420502, "date": "2013-01-17", "retrieved": "2016-04-06T21:26:43.404041", "title": "Federal Income Tax Treatment of the Family", "summary": "Individual income tax provisions have shifted over time, first in increasing the burden on larger families, and then in decreasing it. These shifts were caused by changing tax code features: personal exemptions, standard and itemized deductions, rates, the earned income credit, the child credit, and other standard structural aspects of the tax. Some of these features reflect changes made by the 2001 Bush tax cuts, which were extended for an additional two years by P.L. 111-312 and largely made permanent by the American Taxpayer Relief Act, P.L. 112-240. The distribution of tax burden across income classes has, however, changed relatively little, although burdens at the top and bottom have decreased in recent years. \nWhile several standards may be considered in determining equitable treatment of families over family type and size, a standard approach is based on ability to pay, so that large families with the same income as small ones pay less tax. Based on this standard, the analysis of equity across families suggests that families with children are paying lower rates of tax (or receiving larger negative tax rates) than single individuals and married couples at lower and middle incomes. However, families with children are being taxed more heavily at higher-income levels. At the lowest income levels, the EIC provides the largest tax subsidies to families with two or three children. The smallest subsidies go to childless couples. At middle-income levels, families with many children will have the most favorable treatment, due to the effect of the child credit, which has a very large effect relative to tax liability. At higher-income levels, large families are penalized because the adjustments for children such as personal exemptions and child credits are too small or are phased out, while graduated rates cause larger families that need more income to maintain a given living standard to pay higher taxes. Tax rates are more variable at lower-income levels. At all but the lowest and very highest income levels, singles pay higher taxes than married couples.\nThe analysis of the marriage penalty indicates that marriage penalties have largely been eliminated for those without children throughout the middle-income range, but this change has inevitably expanded marriage bonuses. Marriage penalties remain at the high and low income levels and could also apply to those with children, where the penalty or bonus is not very well defined. But by and large, the current system is likely to encourage rather than discourage marriage and favors married couples over singles.\nThe analysis of equity across families suggests that increases in earned income tax credits for those without children would lead to more equal treatment based on the ability to pay approach, while full refundability of the child credit would exacerbate inequalities. At the higher end of the scale, eliminating phase outs of provisions that differentiate across families would probably lead to more equitable treatment, and containing the effect of the alternative minimum tax is important to both reducing the high burden of taxes on families with children at upper middle-income levels as well as preventing an increasing level of marriage penalties.\nThis report does not include the temporary provisions enacted in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5), although a brief summary is provided in the introduction. Some of the more minor provisions have been extended through 2017 by the American Taxpayer Relief Act (P.L. 112-240).", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/RL33755", "sha1": "c49773e319f5c87d19174c32a6e0a8eabbf2d599", "filename": "files/20130117_RL33755_c49773e319f5c87d19174c32a6e0a8eabbf2d599.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/RL33755", "sha1": "7e0e73c4b6e5e28efcae2d3b7cfe3a28c8f73ce4", "filename": "files/20130117_RL33755_7e0e73c4b6e5e28efcae2d3b7cfe3a28c8f73ce4.pdf", "images": null } ], "topics": [ { "source": "IBCList", "id": 350, "name": "Individual and Family Tax Policy" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc820178/", "id": "RL33755_2008Jan24", "date": "2008-01-24", "retrieved": "2016-03-19T13:57:26", "title": "Federal Income Tax Treatment of the Family", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20080124_RL33755_e397ee8832246cb09abf4e3c656197fd7db44dd3.pdf" }, { "format": "HTML", "filename": "files/20080124_RL33755_e397ee8832246cb09abf4e3c656197fd7db44dd3.html" } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc822393/", "id": "RL33755_2006Dec19", "date": "2006-12-19", "retrieved": "2016-03-19T13:57:26", "title": "Federal Income Tax Treatment of the Family", "summary": "The first section summarizes the major features of the tax law affecting families and family choices, and how they developed over time, including the relatively recent introduction of large benefits for children at low and moderate income levels, a reversal of a trend in the past that tended to reduce these benefits through the erosion of the real value of the personal exemptions. It also summarizes the origin of the marriage penalty and marriage bonus. The following two sections first discuss general equity issues, and then apply the ability-to-pay standard to examine how tax burdens vary by family size, across the income spectrum. The final section examines the marriage penalties and bonuses.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20061219_RL33755_0691b73c18e2fa92ef7a71b942aa1bbc8102b78f.pdf" }, { "format": "HTML", "filename": "files/20061219_RL33755_0691b73c18e2fa92ef7a71b942aa1bbc8102b78f.html" } ], "topics": [ { "source": "LIV", "id": "Taxation", "name": "Taxation" }, { "source": "LIV", "id": "Income tax", "name": "Income tax" }, { "source": "LIV", "id": "Tax deductions", "name": "Tax deductions" }, { "source": "LIV", "id": "Tax exemption", "name": "Tax exemption" } ] } ], "topics": [ "Economic Policy" ] }