Issue Position: Tax Reform
Our federal tax code has become increasingly complex and unfair. Tax rates should be as low as we can afford them to be; and everyone should pay their fair share. Reform options should focus on creating a system that is simple, progressive, easy to comply with and devoid of abusive shelters. When examining reform options, Senator Obama believes that we should ensure any changes to the tax code reflect the needs and everyday worries facing ordinary Americans, while also promoting America's competitiveness in the world economy.
Increasing the Child Tax Credit
Senator Obama has co-sponsored the Working Family Child Assitance Act along with Senators Snowe and Lincoln, to adjust the income requirement for the refundable portion of the Child Tax Credit. This will put more money in the pockets of more working families with children, who are struggling to make ends meet.
In addition, Senator Obama introduced an amendment in the 109th Congress that would provide immediate tax relief to low-income working families from the Gulf Coast disaster areas by enhancing the refundable portion of the child tax credit. As a change from current law, children would no longer be denied a benefit because their parents' incomes are too low.
Expanding the Earned Income Tax Credit (EITC)
The EITC has raised millions of working American families out of poverty, and is considered by policymakers across the political spectrum to be one of the most effective anti-poverty measures in recent history. Senator Obama supports expanding the EITC to cover additional children and families that are struggling to make ends meet. In the 109th Congress, he cosponsored and won passage of an amendment to reduce the marriage penalty for EITC recipients and to ensure that members of our military can include their combat pay when calculating eligibility for tax credits.
Fixing the Alternative Minimum Tax (AMT)
The AMT was originally designed to capture revenue from high-worth individuals but, due to inflation and other factors, has imposed an unfair tax burden on millions of middle income Americans. Senator Obama has supported previous efforts to fix the AMT in a fiscally responsible manner, and will continue to support renewed efforts in the 110th Congress.
Research and Development Tax Credit
Senator Obama understands the importance of American firms investing in research and development in America. He believes that this tax credit should be an important part of America's competitiveness strategy to grow jobs and incomes here at home, which is why he voted to extend the credit in December of 2006.