How is the big tax-break package passed by Congress and signed by President Bush in late May going to effect Missoulians? Republicans and Democrats have voiced their opinions with typically partisan slants. But to get the facts, the Independent enlisted the aid of certified public accountant and owner of Accounting & Tax Solutions Julie Indreland.
If you’re a middle- or upper-income Missoula family with kids at home or a family with plenty of investment income, you’re going to prosper from the tax cut. If you’re childless, spouseless and in the lowest income-tax bracket—making less than $12,000 a year—you’re not going to see one of those $400 checks from the feds late this summer. The majority of Missoulians, though, and Montanans, will see a benefit. Only a small minority with no children, no capital gains and no dividend income, and those in the lowest income-tax bracket won’t get a break, according to Indreland’s research.
The tax cut is filled with shifting brackets and tax credits, phase-ins and phase-outs, but most Missoulians will be most concerned with simple reductions in income tax and higher tax credits. While the cut does lower taxes on dividends and capital gains, the biggest changes come in the form of a bigger child credit—the credit has increased from $600 per child to $1,000 per child this year and next—and a higher deduction for married couples.
“They’ve increased the standard deduction for married couples filing jointly, so they’re getting rid of what everyone called the marriage penalty,” says Indreland.
The average per capital personal income in Missoula County is around $25,000, according to the Missoula Area Economic Development Corporation. With this income, an individual who is married with one child should receive the first $400 of the higher child tax credit later this summer.
“Families receiving the checks this year should be aware that they are receiving their benefit in advance of their filing of the 2003 tax returns,” says Indreland.
Some of those Missoulians left out of the tax cut may yet see some help. After realizing that millions of Americans were excluded from the child tax credit for low-income families, Sen. Max Baucus (D) and many fellow senators scrambled to make changes to include the families. It worked in the Senate, but is being held up in the House. Baucus, the leading Democrat on the Senate Finance Committee, and Committee Chairman Charles E. Grassley (R-Iowa) are pushing House leaders to pass the legislation by June 23 so that the $400 credit checks can be mailed by late summer.