FOR IMMEDIATE RELEASE: March 21, 2007
With 900,000 Middle Class Families In Upstate New York About To Be Hit By The Amt For The First Time, Schumer Unveils Sweeping New Middle Class Tax Cut Package
Comprehensive Legislation Would Provide Targeted Tax Relief At Key Phases Of A Family's Life, Including Expansion of the Child Tax Credit, College Tuition Tax Credit and Two Years of AMT Relief
Schumer: The Concerns of Middle Class Families Have Been Left on the Back Burner for Far Too Long
Schumer's Legislation Would Save Upstate NY Taxpayers Nearly $4 Billion Under the AMT:
With the cost of tuition, health care and energy going through the roof and millions more families about to be hit by the Alternative Minimum Tax this year, U.S. Senator Charles E. Schumer today unveiled a sweeping new package of middle class tax breaks. The comprehensive legislation provides targeted tax breaks to middle class families at every stage of life by: expanding the child tax credit, simplifying and expanding the college tuition tax credit, providing a much needed fix to the AMT, and enhancing tax credits for families taking care of again parents.
"This package provides relief, instead of a tighter squeeze, for middle class families who need it most of all," Schumer said. "Everyone should be able to afford a house, raise a family, help their kids get ahead with a college education, and care for their elderly parents without struggling to make ends meet. With simple, fair changes to our tax code, we can lend middle-class families a much-needed helping hand."
The Middle Class Opportunity Act, which Schumer introduced in the Senate earlier this year, provides targeted tax relief at key phrases of a family's life. Schumer said that middle class families in upstate New York and across the country are struggling to get ahead as they juggle the expenses of childcare, sending kids to college, and taking care of elderly parents. Unfortunately, recent tax cuts were designed to provide the most benefits to the people who don't need them, but didn't provide much relief to middle class families, for whom simple life changes like a new baby or a new school year can create major financial stress.
Today, Schumer, a member of the Senate Finance Committee, highlighted his new tax package and the benefits it would bring to middle class families across New York. Over the next four years, the Act would provide approximately $80 billion more tax relief over the one year of AMT relief in the President's budget.
The centerpiece of his legislation is two-years of much needed relief for middle class families from the Alternative Minimum Tax. Schumer said that record numbers of middle class families are being trapped by the dreaded tax and it is one of the greatest, and costly, tax burdens facing upstate New York families. According to the Congressional Research Service, if no fix is passed, an additional 912,816 families in Upstate New York will have to pay the AMT, costing them $3.87 billion more in taxes. The numbers for upstate families are below:
• In the Capital Region, 11,638 families paid the AMT in 2004. Schumer's bill prevents 73,420 families from falling under the AMT in 2007, saving them $277,305,680.
• In Central New York, 8,706 families paid the AMT in 2004. Schumer's bill prevents 54,927 families from falling under the AMT in 2007, saving them $187,143,482.
• In the Rochester-Finger Lakes region, 15,126 families paid the AMT in 2004. Schumer's bill prevents 95,428 families from falling under the AMT in 2007, saving them $350,496,214.
• In the Hudson Valley, 89,568 families paid the AMT in 2004. Schumer's bill prevents 565,078 families from falling under the AMT in 2007, saving them $2,578,216,516.
• In the North Country, 2,840 families paid the AMT in 2004. Schumer's bill prevents 17,915 families from falling under the AMT in 2007, saving them $70,477,847.
• In the Southern Tier, 4,507 families paid the AMT in 2004. Schumer's bill prevents 28,433 families from falling under the AMT in 2007, saving them $113,438,909.
• In Western New York, 12,302 families paid the AMT in 2004. Schumer's bill prevents 77,614 families from falling under the AMT in 2007, saving them $294,203,748.
"Without action, the AMT would hit upstate New York families like a ton of bricks," Schumer added.
Schumer said that in addition to the looming AMT avalanche, the financial concerns facing middle class range from taking care of the youngest members to the oldest. With the rising cost of college tuition, millions of families are struggling to pay fore the rising cost of public and private tuition. Schumer's legislation focuses on four critical areas where families are seeing skyrocketing costs.
• Increasing the Child Tax Credit - Schumer's legislation provides relief to families with new babies by doubling the child tax credit to $2,000 for the first year of a child's life or in the first year after a child's adoption. To help ease the burden of childcare costs, the bill offers a tax credit to cover 35% of childcare expenses for families earning up to $75,000.
• Help Pay for College -- In previous years, New York families have been eligible for the HOPE credit, the Lifetime Learning credit, and the tuition deduction. These provisions have provided real relief: 246,000 families took advantage of the HOPE credit in 2004, shaving $338 million off their tax bills, 294,000 claimed the Lifetime Learning credit, for a total of $301 million, and 326,000 New York families took the tuition deduction in 2004, deducting $868 million. Under the Schumer bill, these credits and deductions would be combined into one credit, with a maximum of $2,500 per student to help cover tuition, fees and course books.
The new college credit offers two major new benefits for families. First, families with more than one child in college could now claim the credit for two students, rather than just one. Secondly, the credit will also cover students in graduate school and those in community colleges, who were not previously eligible to receive tuition deductions.
• AMT Relief -- Families with incomes between $75,000 and $100,000 who fall into the AMT for the first time, would face a tax increase of nearly $1,000 - eliminating the effects of any tax cuts received since 2001. The Middle Class Opportunity Act extends AMT relief through 2008, providing two full years of relief this year, rather than forcing Congress to go through the same exercise every year.
• Caring for Again Parents - Schumer said that as baby boomers become senior citizens, one of the greatest issues, and burdens, facing middle class families is the ability to pay for the care of their aging parents. Seventy percent of people between the ages of 45 and 55 have at least one living parent, and almost half of women in that age range provide some form of support to an aging parent.
Right now, only families who have elderly parents living with them are eligible to claim the dependent care tax credits for expenses they face caring for elderly parents. The Schumer bill would ensure that all families who are caring for aging parents, whether they live with the family or not, would be eligible for the credit. Families caring for elderly families could save families an average of $200 per month with this credit.