"overtaxation of parenting"

No idea - I wrote a (paid) guest article at the TurboTax Blog

which I list many tax benefits that come with parenthood. Obviously, they have a different take completely.Joe

Republicans dislike taxes and will come up with all sorts of reasons to lower them, even if they don't make sense.

They might be talking about the marriage penalty. This is mainly caused by the threshold for each tax bracket for married couples being

1.5 times what is for single people, as opposed to double.

For example, in 2000, the the 15% bracket was between $0 and $26,250 (of TAXABLE income, which is total income minus exemptions and deductions) for single people, and between $0 and $43,850 for married couples. So if two single people each had taxable income of $26,250 they would each pay only 15%. Once they marry, the taxable income is $52,500, and they are actually in the next higher bracket which is

28%. So $43,850 of their income is taxed at 15%, and the remainder at 28%. See TheBush tax cut eliminated the marriage penalty of the 15% tax bracket,and introduced a new 10% bracket so that the first bit of taxableincome is taxed at the lower rate, and the marriage penalty iseliminated for both these brackets -- meaning that the threshold formarried people is exactly double that of single people. Also, in 2000 the standard deduction for single people was 4400 and for married couples it was 7350. See once the people above marry they have a smaller combined standarddeduction and thus more taxable income. But the Bush tax cuteliminated the marriage penalty in the standard deduction. As your income rises the marriage penalty becomes more extreme due to additional factors such as itemized deduction phaseout, AMT exemption phaseout, etc.

Arguably it's only a penalty if both people are working and they make about the same. Then again, if the threshold for each tax bracket were double for married couples as they are for single people, and we kept the single thresholds and increased the thresholds for married people to be double that of single people, then even married couples with one person working would see a reduction in taxes.

So that's just my guess what they mean. But the marriage penalty is more at higher incomes, and the child tax credit is phased out at these higher incomes anyway, so the credit doesn't help these people. And besides, married people may have no kids, and single people may live together as unmarried people and have kids.

You should write to them and ask what they mean, or try their forums if they have one. Report back what on earth they're talking about. I'm curious.

Blog

in which I list many tax benefits that come with parenthood. Obviously,> they have a different take completely. Your article mentions the child tax credit, so in a way you agree with the National Review article -- in the sense that it's a tax break for having a kid.

The health care bill lowers the amount you can put into an FSA to $2,500 one of these upcoming years, and adjusts it each year for inflation. Do you know if the daycare account is also lowered or eliminated?

Many companies also have a dependent care FSA, which lets you put another $5,000 for medical expenses for your dependents. That brings the total to $15,000. Insane if you ask me!

Also, your article mentions the day care account of $5,000. You can also take the dependent care credit (at worst 20% of the expenses) up to $1,000. But if your company does not have daycare FSA then you can take a credit for the full $6,000 (at worst 20% of $6,000).

reimbursed from the FSA account before deposits have been made

Is this an artifact of the tax law or of the way the FSA company operates? If I were an FSA company processing claims and doing reimbursements I'd wait till the money came in before paying it out. Say someone incurs $5,000 of medical expenses in Jan/5 and they quit Jan/10. If I pay them 5k I'm at a big loss because they will have made only say 1/24 of the annual $5,000 payment towards FSA.

NR suggests parents are overtaxed, I listed benefits. The child tax credit is fine by me, but it was the "overtaxation" I was responding to here.

I'd not yet seen any reduction to the DCA (Dependent Care Account)

reimbursed from the FSA account before deposits have been made

The FSA company is the employer itself, the paperwork may be outsourced, but it's the employer at risk. It's not up to that employer, this is the rule of the account. Your example is correct, but would take remarkable timing to "scam" the system. The "use-it-or-lose-it" provision likely negates this effect. Of the pool of FSA participants, I'd wager more are likely to leave over a bit of money than to time their quitting so precisely. Even if I wished to do this, I wouldn't know how to find such an expensive procedure that creates this high co-pay type of situation. Even having a new baby, our out of pocket that used FSA money wasn't more that $2000.

"The child tax credit is a partial corrective to the tax code's overtaxation of parenting."

What in the tax code taxes parenting?

------------- Nothing if you take the comment literally. It could be that parents are considered "overtaxed" because the exemption for a child is less than the cost of supporting a child. Even that is often not the case since low income people get an earned income credit.

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But the NR article said that the 1k child tax credit mitigates the over-taxation of parents, and your article says the same but doesn't use the word "over-taxation" but rather just the more neutral "deductions and credits".

Hasn't the itemized deduction phase out been phased out?

Here's is how the House Committee explained the reason for including the CTC in the Taxpayer Relief Act of 1997:

The Committee believes that the individual income tax structure does not reduce tax liability by enough to reflect a family's reduced ability to pay taxes as family size increases. In part, this is because over the last 50 years the value of the dependent personal exemption has declined in real terms by over one-third. The Committee believes that a tax credit for families with dependent children will reduce the individual income tax burden of those families, will better recognize the financial responsibilities of raising dependent children, and will promote family values.

If two single people make 100k they won't hit the itemized deduction phaseout. But married they will

The schedule A form says

29 Is Form 1040, line 38, over $166,800 (over $83,400 if married filing separately)? No. Your deduction is not limited. Add the amounts in the far right column for lines 4 through 28. Also, enter this amount on Form 1040, line 40a. Yes. Your deduction may be limited. See page A-11 for the amount to enter.

If you make millions, the itemized deduction is phased out to 20% of its maximum value.

AMT exemption for single people is 46,700 for single people, and

70,950 for married couples -- so they're more likely to hit AMT. The exemption is phased out at 112,500 for single people, and 150,000 for married couples, so a couple with 200k would see the AMT exemption phased out, while the single people making 100k would not see this.

See Sch A Line 29 for lack of phase out language.

OK, I remember know, the Bush tax cut phased out the itemized deduction phaseout and in 2010 there is no phaseout. As an aside, a lot of people with incomes like 200k in CA will find they will pay more AMT (the regular tax will be less because of the elimination of phaseout, but the tentative tax will be the same, so the AMT tax will be higher by the same amount). There is still marriage penalty on AMT tax.

I make no judgment. I stated a fact. There are benefits for parents. I don't conclude that without such a benefit they'd be overtaxed. You said earlier "it's a tax break for having a kid." I agree with that statement. Just as the extra exemption is a similar break.

Let's take a step back. How are parents overtaxed any more or less than those who are childless? I have no issue giving them a break. But it's for the good of society, not to make up for a wrong.