Fiscal Cliff Hurts Children

As the date looms for what is called the "fiscal cliff" there is very little discussion on what this actually means to the low income family.

To begin with, a major part of this "fiscal cliff" has to deal with the Alternative Minimum Tax (AMT) which expired in 2011.  This means taxes are going to increase on Middle and Lower Class families, but let us examine the impact on Lower Class families.

Tax returns, or more specifically the Earned Income Credit (EIC) will be delayed.  The EIC is the lifeline for low income communities and in most cases, it is the last hope for struggling families.

In many instances, low income families file for the EIC to keep a roof over their heads.  Many are single mothers who do not work, mostly because there are no jobs and a lack of transportation to jobs that traditionally pay minimum wage.  These parents supplement their income with odd service jobs to make ends meet.

So, let's examine what would happen is the EIC is delayed until March 2013 or later.

Many cannot afford Christmas gifts for the family.  This is why local economies will be injected with a boost with shopping sprees for the children.  Local merchants would not generate the traditional January business (early filing) and would be stuck with overstock.  More than that, these merchants who rely upon this boom would not be able to make quarterly property and income tax payments.  Struggling businesses may be forced to shut down.

Also, many families use this EIC to pay property taxes.  When property taxes are not paid, there would be created an artificial whole in local governmental budgets, affecting public services and payless paydays.

The EIC is issued during the coldest months of the year, forcing many families to turn to state assistance to stay in their homes and keep the heat on.  The burden of increased applications for social assistance would in turn strain local governmental budgets, which are already facing unexpected unpaid property taxes.

In some events, educational, medical and child welfare service budgets, already strained, would be pushed to the brink of implosion as children would be forced to rely upon the system because of the delay of the EIC.

As Congress plays the political game of tax rates, keep in mind, taxpayers will pay in the end and it will mostly be the children of the Middle and Lower Classes.

It is time to include children in the tax debates.

IRS Letter on Delay of 2012 Tax Returns

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