13.6: Tax Relief

Provide substantial tax relief to low-income workers and families.

Other Information:

Protections for Low-Income Working Households. Current law hits low-income workers and others with the full weight of today's payroll taxes, whatever their wage and salary income may be. The Heritage tax plan folds all payroll taxes—or FICA—into the single tax system. It then eliminates all income tax on low-income workers through the health insurance tax credit described above (a $3,500 nonrefundable tax credit for families and $2,000 credit for individuals). In addition, the Earned Income Credit is retained as part of the overall system of financial support for low-income Americans. Further, the calculation of taxable income excludes all other cash and noncash benefits provided by the federal government through its anti-poverty programs, such as food stamps. The net effect is that, compared to current law, this plan provides substantial tax relief to low-income workers and families.

Stakeholder(s):

• Low-Income Workers

Indicator(s):

Indicator:1

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