The answer is about $45,000
Reminder: Median household income is just a tad over $50,000
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Here’s an analytical walk-through from the non-partisan Tax Foundation …
Start with the answer: assume a family of four making $45,000 in adjusted gross income.
Subtract a standard deduction of $11,600 and personal exemptions of $14,800 (four times $3,700) and the family’s taxable income is reduced to $18,600.
The family is taxed at 10 percent on their first $17,000 of income and at 15 percent for their remaining $1,600 of income, giving them a total tax liability of $1,940.
But, they allowed to deduct two tax credits of $1,000 for each of their two children.
And, they’re allowed to deduct an additional $214 due to the Earned Income Tax Credit, which is a credit designed to financially assist low to
moderate income working families.
Subtracting these tax credits from the family’s tax liability brings their $1,940 liability below zero.
However, since the child credits and Earned Income Tax Credit are so-called refundable tax credits, the family ends up receiving a check for $274 from the IRS for the remaining value of their tax credits.
For families who are eligible for other credits such as the child care credit, education credit, or the tax credit for purchasing a hybrid vehicle….. AGI can go higher than $45,000 with no tax liability.
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Ironic Twist
The same George Bush that the left demonizes is the President who signed the 10% marginal tax bracket, boosted the child credits, and introduced the refunable tax credits.
The irony: liberals should be praising him and conservatives should be dissing him.
If it weren’t for the evil Bush tax cuts, we wouldn’t be at the now famous 47% level of folks not paying Federal income taxes.
Tomorrow: Who pays taxes and who gets the benefits?
The Homa Files 