WASHINGTON — Oklahoma families would lose valuable tax credits, along with having their income tax rates go up, if no agreement is reached to extend the current tax rates, according to a White House report.
An estimated 447,000 Oklahoma families will lose access to the Child Tax Credit and about 90,000 families in the state will no longer be able to claim the American Opportunity Tax Credit that helps pay for college, according to the White House report.
The White House has been pressuring congressional Republicans to extend current income tax rates for 98 percent of taxpayers while allowing rates to rise for the top earners. The rates are set to increase automatically in January. Republicans agree with extending the tax rates for the middle class but don't want rates to go up for upper brackets, saying it would hurt small businesses that file returns under the individual tax code.
President Barack Obama last week called on Americans to urge Congress to extend the tax cuts, and the White House has been waging a public-relations campaign to highlight the potential consequences of letting them expire.
The Obama administration reported last week that 1.3 million Oklahoma families would see their taxes increase if no action is taken before the new year.
The White House report released Wednesday includes specific examples of how the tax increases would hit families at various income levels:
• A family of four with household income of $63,100 could expect a tax increase of $2,200. Of that, $890 would come from merging the 10 percent bracket into the 15 percent bracket; $1,000 would come from reducing the Child Tax Credit from $1,000 to $500 per child; and $310 would come from reducing the standard deduction for married couples.
• A family of four with income of $80,000, a teenager at home and a sophomore at the University of Oklahoma would pay $2,250 more; along with the changes cited in the previous example, the couple would lose $550 in credit that now can be claimed for a child in college through the American Opportunity Tax Credit.
• A couple with one child, earning $130,000, would face a tax increase of $4,040; of that, $3,150 would come from a combination of the expiring marriage penalty relief and the increase of the 25 percent tax rate to 28 percent; $890 would come from the expiration of the 10 percent tax rate.
• A single mother with two children, who is working full time and earning $24,000 a year, could expect a tax hike of $1,670; of that, $1,500 would come because the child tax credit would fall from $1,000 to $500 per child, and less of the credit would be available to low- and moderate-income families; $170 would come from the expiration of the 10 percent tax bracket.