Bush breaks pledge and increases taxes on teenagers

[Quixote1818]

Despite Pledge, Taxes Increase for Teenagers

By DAVID CAY JOHNSTON, The New York Times



(May 21) - The $69 billion tax cut bill that President Bush signed this week tripled tax rates for teenagers with college savings funds, despite Mr. Bush's 1999 pledge to veto any tax increase.

Under the new law, teenagers age 14 to 17 with investment income will now be taxed at the same rate as their parents, not at their own rates. Long-term capital gains and dividends that had been taxed at 5 percent will now be taxed at 15 percent. Interest that had been taxed at 10 percent will now be taxed at as much as 35 percent.

The increases, which are retroactive to the first day of the year, are expected to generate nearly $2.2 billion over 10 years, according to the Congressional Joint Committee on Taxation, which issues the official estimates.

Over all, the tax bill that Mr. Bush signed Wednesday reduces taxes by $69 billion.

Mr. Bush pledged in 1999 to veto any bill that raised taxes. In response to a question about the tax increase on teenagers in the new legislation, the White House issued a statement Friday that made no reference to the tax increase, but recounted the tax cuts the administration has sponsored and stated that President Bush had "reduced taxes on all people who pay income taxes."

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[dsc]

1. frankly as a matter of public policy it makes sense

but it does break his promise.

[pitohui]

2. oh boo hoo hoo

because when i was a teen-ager i had SOOOOO much free money available to put into investments, didn't you?

yes, they should be taxed at the parent's rate, otherwise it's just another hand-out to the rich

real teens don't have free $$$ to spend on the stock market, have you priced college lately?

[Quixote1818]

3. Bush broke his pledge, thats the issue here. nt

[pitohui]

9. he always break his pledge

i can't give one tiny fart abt this one, even to make such a pledge was just another promise to rich people anyway

[Horse with no Name]

6. or

these could be kids who had a parent die and inherited money that was invested so that child would be able to go to college.

[Kagemusha]

4. Those Republican teens are going to carry quite a grudge.

Good. I'm glad they get to personally suffer at the hands of their "own kind" and get to feel anti-kid discrimination personally. Might teach them something and alter their decisions later in life.

[Marr]

5. Damn- life is tough for trust fund kids!

Glad I was stuck hanging drywall and eating potatoes 3 times a day when I was 14! I didn't have to deal with all those horrible investment taxes!

[bmcatt]

7. Be angry, but...

Please remember that there *is* language in the tax code that allows for limited *gifts* to others ($11,000 per donating person). As such, if the money was gifted to the teens, it is, by defnition, theirs.

This sounds about as bad as, say, New York trying to tax non-resident income based on a tax-rate calculated for the entire family's income.

And, also - not everyone who, as a teen, has investment income is a "trust fund" kid. Some of them work and choose to invest their extra income instead of spending it as soon as it hits their pocket, and some of it may be gifted by working parents who are trying to teach their kids about how to manage their own money for when they're grown up.

[elehhhhna]

8. so, we pay tax on income--even investment income,

from gifted money(tax free gifts, btw). Wah!

With regard to teaching kids about money, I think that leaving taxes out of the equation is silly.

[bmcatt]

10. Fine - separate tax forms

But in that case, allow the kids to have their own tax forms without penalizing the parents for the loss of the deductions / exemptions.

If divorced parents have the right to select which one gets to claim a child on their tax forms then a child should have the right to file separately but not be claimed on their own forms.

And I never said that taxes should be left out of it. But don't punish the child's assets just because the child has investment income.