The “Procreative Mormons Suck the Nation Dry” Tax Credit

You can earn $100,000 and pay no federal income tax. You say “John, how can I earn $100,000 and pay no federal income tax?” First, earn $100,000. Now, you say, “John, what do I say to the tax man when he comes to my door and says, ‘You have never paid taxes’?” Four simple words, although not so simply said: “I have eight children!”

The Taxpayer Relief Act of 1997 introduced to U.S. taxpayers a credit against income tax of $400 per dependent child. Other acts have raised the credit to the current $1,000 per child. Combined with the $3,500 exemption of taxable income for each family member, this credit can produce an extremely low tax liability. The table below shows the amount of adjusted gross income below which a married couple will pay no federal income tax. There are no accounting tricks involved, no capital gains whatevers or accelerated depreciations, or offshore shelters. Just plain old wage income, the standard deduction (not itemized), and no need to file anything but a 1040A.

Number of dependent children Adjusted gross income
1 $31,400
2 $43,600
3 $53,750
4 $63,900
5 $74,100
6 $84,250
7 $94,400
8 $100,720
9 $104,566
10 $108,412
11 $112,258
12 $116,104

Besides the Child Tax Credit, there is also the Additional Child Tax Credit, the purpose of which is remedy the unfairness that some people can’t receive the full value of the Child Tax Credit only because they already owe no income tax. For example, a married couple with six children and an AGI of $70,000 might owe $3,859 tax before credits. The Child Tax Credit would cover all of that, and then because of the Additional Child Tax Credit, the U.S. Treasury will send the family $2,141, the balance of the $6,000 Child Tax Credit that the family otherwise would have missed out on because its income was too low. This family has a negative federal income tax.

The measures raising the Child Tax Credit to $1,000 were temporary (so as to minimize their projected budgetary impact), and after 2010, the Child Tax Credit will revert to $500 per child unless Congress does something. The politics of that may get interesting if word gets around that a large family (i.e., probably devout Catholic, Mormon, or maybe Evangelical) can pull in a household income well above the national median and yet pay no federal income tax. Senate Majority Leader Harry Reid and Speaker of the House Nancy Pelosi each have five adult children, but on the other hand, Mrs. Pelosi has only seven grandchildren. I would guess that the Child Tax Credit mostly goes to households that did not vote for President Obama. It’s only my conjecture, but below is a graph, not based on any data, showing how I suspect the voting fell.

obamavote

Now I could be wrong. The relationship may not be linear, though I would be extremely surprised if it were not monotonic, and a negative percentage of the vote may not even be possible. So if your family claimed seven or more dependents on your 2008 taxes, and you cast a ballot for Barack Obama last November, to the first three such commenters, I will mail a copy of our President’s autobiography, Dreams from My Father: A Story of Race and Inheritance. After you get it, send me a photo of your family all enjoying a reading together, and we’ll put it up here at Millennial Star.

At any rate, it will be pretty tough in 2010 for the Democrats to be “for taxes” and “against children” and allow the doubled Child Tax Credit to expire, but its recipients are largely not their supporters, and President Obama could probably get away with saying “I don’t see why we’re giving all this money to people just because they want to raise their own basketball team,” to which his supporters will respond, “Yeah, we shouldn’t be supporting large families.”

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About John Mansfield

Mansfield in the desertA third-generation southern Nevadan, I have lived in exile most of my life in such places as Los Alamos, Baltimore, Los Angeles, the western suburbs of Detroit, and currently the northern suburbs of Washington, D.C. I work as a fluid dynamics engineer. I was baptized at age twelve in the font of the Las Vegas Nevada Central Stake Center, and on my nineteenth birthday I received the endowment in the St. George Temple. I served as a missionary mostly in the Patagonia of Argentina from 1985 to 1987. My true calling in the Church seems to be working with Cub Scouts, whom I have served in different capacities in four states most years since 1992. (My oldest boy turned eight in 2004.) I also currently teach Sunday School to the thirteen-year-olds. I hold degrees from two universities named for men who died in the 1870s, the Brigham Young University and the Johns Hopkins University. My wife is Elizabeth Pack Mansfield, who comes from New Mexico's north central mountains and studied molecular biology at the same two schools I attended. We have four sons, whose care and admonition, along with care of my aged father, require much of Elizabeth's time. She currently serves the Church as Mia-Maid advisor, ward music chairman, and choir director, and plays violin whenever she can. One day, I would like to make shoes.

22 thoughts on “The “Procreative Mormons Suck the Nation Dry” Tax Credit

  1. John M, great post!

    Given demographic trends (ie, smaller family sizes in most of the Western world) and the need for SOMEBODY to pay for Social Security and Medicare for me and you, it seems a pretty good use of federal funds to allow all these deductions for kids. I agree that at some point the Dems will try to decrease deductions for large families, very few of whom vote Democratic.

  2. By the way, I’m pretty sure one guy in my ward with four kids voted for Obama. But he doesn’t make the cutoff, and he’s not much of a guy for blogging. It will be interesting to see if we get any takers with seven or more dependents.

  3. You sound bitter! Shouldn’t the incentive be to increase or maintain population?

  4. More seriously, doubling the Child Tax Credit makes it a lot more like European kindergelt. An argument could be made for it, but I feel that we’ve moved from support to subsidy and might do well to turn it down a little. That said, a Child Tax Credit is less distorting to the economy and American life than the terrible things we’ve done with mortgage interest deductions and sheltered capital gains on residences.

  5. I was getting excited about taking home my whole salary when I finally start making one, but then it hit me that I’ll still be paying Medicare and Social Security. So there is still a significant tax burden for these families. It’s just not categorized as federal income tax.

  6. Tom, there’s no way to get away from the tax man (or woman). Property taxes, sales taxes, vehicle registering fees — the various layers of government will suck you dry. Sorry.

  7. John M, regarding the correct adjective you are looking for (see comment #4), it is neither “bitter” nor “sour.” It is “curmudgeonly.”

  8. Oh come on. I’ve got six kids and voted for Obama. Guess I’m the 10% on your graph. I figured if Bush would push a 300 billion handout to the banks through congress, how bad could a democrat be? Now I know. Obama printed 1 trillion dollars and bypassed congress all together.

    Gotta love the child tax credit, though. Every April 15th, I always express appreciation to my single co-workers for subsidizing my children’s future. I even bring ‘em donuts — paid out of my refund check!

  9. Martin, you have, I hope, also learned an important lesson in basic economics. That lesson is: “you can’t pay for a whole lot of new stuff without raising some taxes on everybody, even if you promised during the campaign it would only affect the wealthy.” That is a lesson we middle class people are about to learn big-time.

  10. Brian J., thanks for the CNN polling links. The first link shows 65% of unmarried voters choosing Obama compared with 47% of married voters. Then, it gives identical voting patterns for those who have children under 18 and those who don’t: 53% for Obama, 45% for McCain, and 2% for neither. That’s astonishing.

    The second link has the question “Are you married with children?” 48% of those who were voted for Obama, and 56% of those who weren’t voted for him. So the ordering there would be: unmarried (65%), not married with children (56%), married with children (48%), married (45%).

    Really interesting was the next part of the second link with a full matrix of male/female, married/unmarried, kids/kidless. Ordering the men: unmarried w/kids (68%), unmarried no kids (56%), married no kids (48%), married w/kids (45%). Ordering the women: unmarried w/kids (74%), unmarried no kids (69%), married w/kids (51%), married no kids (44%).

  11. I think your “conjecture” in the graph probably reflects “white” voters. In my own area, the Latin and African Americans pop out a ton of babies. There is no way they let the white yuppies take away their tax credit. But…that’s just my own conjecture.

  12. Geoff B., I’ve learned nothing of the sort. Bush never charged us for the wars. He put it on his Chinese credit card. Obama’s not going to raise taxes either. He just prints his own money.

    John, don’t get me wrong, I would love the book, but I don’t think I could give you the value for your money — I don’t think my wife would feel good about posting a picture of our family like that.

    Besides, think of the potential scandal. What if, by some chance, I held a visible church calling? Can you imagine if it was publicly known that such a person voted for Obama? Somebody might lose their testimony. That photo you asked for could end up in a newspaper… oh wait… nobody reads those anymore, do they?

  13. Okay, I was being very flip. But I will point out that my brother pointed out to me that anybody who could defend partial birth abortion has got to be evil. Therefore, anybody who voted for him has voted for an evil man.

    While I can’t argue with the logic, I find the perspective too simple. I truly am quite careful about discussing politics. I strongly believe in the church and its teachings, but I also find myself leaning to the left politically, and remarkably the majority of LDS find this incompatible.

  14. Blasted tax credit came too late for me. In 1997, my oldest was 20, and it wasn’t long before all five of them were gone, and the tax credits with them.

    Still, if you want to get rich and enjoy the freedom that comes with no responsibility, the sensible economic decision these days is to reduce the number of your children to zero.

    (There are a number of people to whom I would strongly recommend this course!)

  15. On a personal level, these credits have been great for me and mine.

    Martin, I know a few people in my area who hold visible church callings and voted for Obama – and all of them have kids. I must live on Mars – and even here I try not to talk about politics at church.

  16. I only have three kids, but voted for Obama. I did make the mistake of wearing an Obama shirt on a Wednesday night when our ward has all of it’s activities. I got some strange looks and some semi scathing comments, though, they weren’t at me they were at Obama. I was released from my Elders Quorum presidency position that next Sunday. I’m sure it had nothing to do with that as I was called to be young men’s president. I guess they aren’t afraid of me corrupting them.

  17. Interesting discussion. As a mother of five, who voted for McCain, I think it is very tough to raise a big family on $74,000 a year. My hat is off to those who do. Also I know big families are paying local and state taxes, so they really are not tax free. The value in children, is by becoming productive adult citizens, they are well worth the tax deduction.

  18. People ask why I have so many kids, I reply that when Social Security is insolvent, I will have a source of support in my old age. If that doesn’t work, I let them in on the true reason. My wife and I both have genius level IQ’s and a secret government agency is paying us to have as many kids as possible.

  19. OK I stumbled upon this site and read with interest your blog. We have 6 children– 2 of whom we adopted from China9to the costr of 50K and we have an equity balance as a result). we make only 64K per year and are going from paycheck to paycheck but I would not change a thing. We have 6 because we love kids. Has nothing to do with taxes. Two of our children now have a home they may never have had and we have been blessed with them in our lives. We are not catholic or Mormon. And BOTH of us as well as our 18yr old (the oldest) voted happily for OBAMA!!! FYI we also voted Bush in. But after 8yrs we needed change :o)

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