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Wednesday
Dec082010

Lowest Wage Earners Could Come Out ‘Behind’ In Tax Compromise

Photo Courtesy -- ABC News(WASHINGTON) – The Director of the National Economic Council has acknowledged in an interview with ABC News that the new tax cut compromise, if passed, could leave some low wage earners ‘behind.”

Despite attempts by Director Larry Summers to dust over the issue, he told ABC’s Jake Tapper that if some low-income earners “don't benefit from the unemployment insurance, if they don't benefit from the economic growth, if they don't benefit from the EITC or the child care or the American Opportunity Credit -- might be $80 behind.”

As The New York Times first reported, low wage earners who currently receive tax credits through the Making Work Pay tax credit may get a sour deal in the new compromise which replaces that tax credit with a tax reduction of two percent. For some however, the Making Work Pay credit is larger than two percent of their income – which means that some low income earners would pay more in 2011 than in 2010.
 
Summers argued that the deal would be better for low wage earners than the House deal that failed in the Senate or than if everything expires and nothing passes.
 
After being asked by Tapper, however, about how those on the lowest end of the spectrum would fair, Summers acknowledged that those who would get $400 in tax credits this year would get only $320 under the new compromise.

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