June 2024 - When Tax Policy Discriminates - The TCJA’s Impact on

As a result, under the TCJA, the Kiddie Tax went from the parent’s rate to the trust rate in 2018, and then back to the parent’s rate once more in 2020. [...] The justification for placing the tax burden on the recipient while giving the payor a deduction was that the scheme served as a government subsidy for the 13 THE ROOSEVELT INSTITUTE | ROOSEVELTINSTITUTE. [...] Black taxpayers in the highest quintile of earners earn less than high-income white taxpayers.8 In the lower part of the highest quintile, losing the tax savings that the older alimony rules provided might have a greater impact on black couples than on wealthier white couples because alimony payments made on the bottom edge of the quintile could tip the payor into a lower tax bracket, giving the c. [...] In terms of income, they find that most children living in households in the bottom decile are completely ineligible for the CTC, the majority of children in the bottom three deciles are only eligible for a partial credit, and virtually all children in the top half of the income distribution qualify for the full credit amount (Goldin and Michelmore 2021). [...] Of the permanent changes to the individual tax, the following changes do little to help, or actively harm, low-income taxpayers, with a disproportionate impact on Black taxpayers: ● The new method of measuring inflation; ● The repeal of the ACA’s Individual Mandate; and ● The expansion of 529 plans to include K-12 education.