Tax credit cuts could hurt Utah families
The Senate and White House reached an agreement to avoid the fiscal cliff but Congress has not officially voted on the deal.
The House of Representatives has gone home and will not be back until noon on Tuesday, which means tax increases and spending cuts technically kicked in.
When the House does return, they will have a proposal awaiting them.
In calls late Monday night, Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi have sketched an agreement with President Obama.
The deal reportedly calls for a two-month delay on enacting federal spending cuts and the estate tax limit will remain at $5 million, but will increase every year with inflation.
But with no official vote, several tax credits are set to expire or reduce starting Tuesday.
One of the most significant for Utah is the child tax credit. When mother Susan Wyatt heard Congress missed the midnight deadline she said, “I’m ridiculously angry.”
On Tuesday, President Obama announced, “the potential agreement that’s being talked about would not only make sure that taxes don’t go up on middle class families, it also would extend tax credits for families with children.”
However, with no official vote by Congress, come Tuesday, the child tax credit is cut in half, from up to $1,000 to $500. And in Utah, the state with the highest birthrate.
“It definitely hits home for a lot of people,” said Wyatt.
Utahns count on a tax credit for each qualifying child under age 17.
Susan Wyatt has two daughters but worries more about how a credit reduction would affect her friends.
“People who are already strapped to the brink that’s really gonna put a tremendous burden to other people,” said Wyatt.
For Allyson Frampton, mother of six kids, “it will definitely affect our spending in that first quarter.”
Frampton says she’ll be pumping less money into the economy.
Former Lieutenant Governor Val Oveson used to be an IRS taxpayer advocate in Washington. He’s confident Congress and the president will reach a deal restoring the child tax credit to $1,000.
“I think the consequences are so disastrous, it will happen.”