Connecticut Post - My Plan for Middle Class Tax Relief
The American dream has always consisted of a simple promise: If you work hard and play by the rules, you'll have a real shot at prosperity. In recent years, that promise has been broken. While Congressman Christopher Shays and President Bush have been giving huge tax cuts to the wealthy, the middle class is being squeezed. As a small-business owner put it to me last week: "We pay more and more for health care, college tuition and gasoline, and at the same time we're in the middle of the worst slowdown I can remember."
This issue is deeply personal to me. I grew up with a single working mom in a small town. We didn't have a lot of extra money and I worked just about every part-time job in town. Thanks to a good public school and a supportive community, I was able to go to Harvard, win a Rhodes scholarship and pursue fulfilling careers in business and the nonprofit sector.
I have two young daughters, and I worry that they may not grow up in an America with that kind of opportunity. I'm running for Congress because I want to renew the promise of the American dream by strengthening our middle class and creating opportunity for everyone. The first step is to give middle-class families long overdue tax relief. I am proposing a tax cut package that will help people achieve three pillars of the American dream: sending children to college, owning a home and saving to build wealth over time.
A college education is the necessary first step to unlocking the doors of opportunity. Over the course of a career, a college graduate will earn on average $1 million more than a high school graduate without a college degree. But with tuition costs spiraling out of control, families are being forced to stretch more and more to pay for a college education - and the economic opportunity that comes with it. To meet this challenge, I am proposing a new Higher Education Tax Credit of $5,000 for families spending $10,000 or more on college costs. This benefit will be available for all four years of college - and it will deliver on the promise that if you work hard, our government will meet you halfway. By reducing the cost of college for middle-class families, we can ensure that America continues to produce the most educated and most prosperous work force in the world. A second cornerstone of the American dream is homeownership. Unfortunately, the recent crisis in the housing market has eroded the value of our homes and our economic peace of mind. At the same time, a fearful credit market has made it more difficult for young families to get a foothold in the middle class by purchasing a home. Here in Fairfield County, home sales are down 32 percent from just one year ago.
That's why I am calling for a new First Home Tax Credit of $1,500. This benefit for first-time homebuyers will help credit-worthy families achieve home ownership. A similar program implemented in the District of Columbia has enabled tens of thousands of families to become homeowners - while significantly increasing home values throughout the District of Columbia by stimulating demand. By jump-starting the housing market, we can help more families achieve and sustain the American dream.
Finally, the basic stability of our economy depends on saving. In recent years, however, families have faced mounting expenses, with less and less left over for saving. I believe we should reward families and individuals that make sacrifices to save for their futures.
That is why I am proposing to significantly expand the Saver's Credit and make middle-class families eligible for a 50 percent tax credit on the first $2,000 they put into their 401(k), IRA or other retirement plan - meaning that for every $2 you save, you get $1 back on your tax return. This tax credit will help families save for their futures and, by increasing our national savings rate, it will strengthen our economy as a whole.
Indeed, each of these tax cuts will serve as a stimulus for our economy. They will encourage growth in the short term by putting money in the hands of families that need it. And they will keep our economy strong in the long run by making education more affordable, home ownership more attainable and savings more abundant. Moreover, these tax cuts are not expensive, and can be paid for by ending special tax breaks for oil companies and the war in Iraq, which alone costs us $13 billion a month. Middle-class tax relief will not be free, but it will be affordable - keeping the American dream alive for millions of families
Jim Himes is the Democratic Party-endorsed candidate seeking the party's nomination for Congress in the 4th District in an Aug. 12 primary election. He is a resident of Greenwich.