Parents get taxed twice because of the nature of the entitlement system, according to Sen. Mike Lee, R-Utah, so he developed a tax reform plan that would mitigate this "parent tax penalty," as well as begin to turn the lessons of the 2012 election into policies that clearly benefit the middle class.
Lee wants to give all parents an annual $2,500 tax credit for each child they have. "Our system, as it's set up today, depends for its existence, for its vitality, on children being born today, on children being raised today who will become the workers of tomorrow and who will be able to pay into the system to fund those [entitlement] programs," he told the Washington Examiner in a phone interview Wednesday evening.
"And the current system doesn't recognize – doesn't come close to recognizing – the expense that today's working parents face in doing that," he said, citing a recent Department of Agriculture report that middle-class parents spend about $300,000 raising each of the children in their families.
The $2,500 tax credit would be given for each child up to the age of 16, making it worth $40,000-per-child.
Those children then grow up to pay taxes that finance entitlement programs used not only by their parents, but also childless Americans. Thus, Lee says, parents end up paying into the system multiple times – through their annual tax payments, and then the extra $300,000 spent on each child.
"The real purpose in this is to help make an unfairness in the current code, an unfairness that is particularly egregious with regard to America's working families, less unfair," he said. "We want to make it more fair. This is a strong step in the right direction."
This child tax credit is the centerpiece of Lee's “Family Fairness and Opportunity Tax Reform Act,” a bill he plans to introduce in the Senate as part of the fall fiscal negotiations.
More than a particular policy proposal, the bill also represents an attempt by Lee to correct what he regards as mistakes made by Republican candidates who have failed to convince voters that the abstract policies they championed would have particular benefits for the lives of working Americans.
"For a political party too often seen as out of touch, aligned with the rich, indifferent to the less fortunate, and uninterested in solving the problems of working families, Republicans could not ask for a more worthy cause around which to build a new conservative reform agenda," Lee said in a speech on his agenda prepared for a Tuesday event at the American Enterprise Institute.
"And so, the great challenge to the Republican Party is to craft such an agenda that is at once more responsive to the inequality crisis plaguing American society today, and more consistent with our true, conservative principles."
Lee even makes an observation that familiar to people who heard President Obama's campaign speeches during the 2012 election.
"[A]t the top of our society, we find a political and economic elite that – having reached the highest rungs – has pulled up the ladder behind itself, denying others the chance even to climb," he wrote in the AEI speech, before eschewing Obama's proposed responses to that lack of equality.
"It is government policies, after all, that trap poor children in rotten schools; poor families in broken neighborhoods; that penalize single parents for getting raises, or getting married. It is government policies that inflate costs and limit access to quality schools and health care; that hamstring badly needed innovation in higher education; and penalize parents’ investment in their children."