Marco Rubio's Childhood Family Wouldn't Have Benefitted From His Family Tax Credit
In last night's debate, Marco Rubio tried once again to sell himself as a populist candidate who wants to help hardworking people like his parents. Although his media boosters like to pretend otherwise, this emphasis is a purely rhetorical gimmick. His initial tax plan, as scored by the Tax Policy Center, featured huge tax cuts for the rich (top 0.1% will get a nice $240,000 gift) and almost nothing for the poor (bottom 20% will get a measley $79 while the next 20% gets $338). And if that wasn't bad enough, Rubio subsequently took his initial plan and made it an even bigger giveaway to the super-rich by eliminating all capital income taxes.
How exactly this is meant to help struggling working families is not entirely clear. In one of the earlier debates, Rubio seemed to have adopted a supply-side rationale: cutting taxes on the very rich job creators will help people like his low-income bartender dad because it will give them jobs. Needless to say, this old trickle-down line is not exactly the fresh-faced conservative populism his boosters keep promising.
Child Tax Credit
What his dozens of media boosters say make him a populist is his adoption of Robert Stein's non-refundable $2500 child tax credit (see Stein explain it in National Affairs, Room to Grow, and in an interview at The Week). This is the thing that is supposed to be really good for struggling families like the family Rubio grew up in. This framing raises the interesting question though: how much would a family similar to Rubio's childhood family actually benefit from this credit?
Taxes are very complicated and there are a lot of possible interactions and different circumstances, but we can at least do some very general back of the envelope math to get in the ballpark.
According to his Wikipedia page, Rubio's childhood family consisted of himself, two siblings, a bartender father and a housekeeper mom. The BLS puts the median bartender pay at $18,900 and the median housekeeper pay at $19,570. Together that's a gross family income of $38,470.
Under the current tax code, that gross family income would be adjusted down by $12,600 for the standard deduction and $20,000 for personal and dependent exemptions. That leaves us an adjusted gross income of $5,870.
The income tax rate for that $5,870 would be 10%. That means an initial income tax liability of $587. The gross family income of $38,470 would also be subjected to an employee-side payroll tax of 7.65%. That means a payroll tax liability of $2943. Together, then, the total initial federal tax liability would be $3530.
From here, we bring in the tax credits. A married three-child family with $38,470 of earnings would be in the phaseout zone of the EITC and receive a refundable credit of $3117. There is also the Child Tax Credit and Additional Child Tax Credit, which pays out a benefit equal to 15% of family earnings over $3,000, up to $1000 per child. Given their earnings, the family would get another $3000 from this. After subtracting these credits (which are refundable) from the initial federal tax liability, the ultimate federal tax liability goes to -$2587.
The Reformocon $2500 bonus Child Tax Credit is completely nonrefundable. If you have no more payroll or income tax liability left, like Rubio's family, you get nothing. This means, relative to the status quo, the Reformocon tax credit has nothing to offer the modern-day equivalent of Rubio's childhood family.
A similar three-child family making $100,000/year, however, would cash out big time.
The Deprivation of Rubio's Family Is Intentional
The deprivation of Rubio-like families is not an accident. As plan architect Stein explains:
The proposed child tax credit is designed to "hold harmless the bottom 20 percent," but "not designed to encourage fertility in the poor over and above what we already do," [Stein] said.
Measures like increasing the CTC would strengthen the economic foundations of middle-income families as well. To reduce the possibility that an expanded CTC might encourage single-parenthood, we would not make it refundable for people beyond their payroll and income tax liability.
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