Three general features of the plan are most striking. First, it is
tightly targeted at the middle class families who need
help most. About 85 percent of the tax benefits will go to families that
earn less than $100,000 per year. Second, the President's proposal
invests in those who are investing in our future:
getting an education, buying a home, raising a family. Third, every
penny of the Middle Class Bill of Rights if fully paid for by spending
cuts--with billions left over for deficit reduction.
The Middle Class Bill of Rights has four components:
$10,000 Education Tax Deduction: Americans can deduct from
their taxable income the money they spend on post-secondary education
for themselves or their families. Once the policy isfully implemented,
up to $10,000 of education spending will be deductible each year.
Taxpayers would not have to itemize their deductions to get the
education and training deduction. To focus the tax cut on
the middle class, deductibility is gradually phased out over the income
range of $100,000 to $120,000 for a couple filing jointly, and between
$70,000 and $90,000 for individuals.
$500 Child Tax Credit: A $500 non-refundable tax credit will
be allowed for each child under the age of 13. This tax credit will be
available to any family whose income is less than $75,000 -- the
families with young and growing children.
An Expansion of IRAs: The IRA proposal would expand the
availability of deductible IRAs to all middle income families.
Working Americans with family incomes under $100,000
would be able to put $2,000 tax free into an IRA account and then be
able to withdraw that money tax free -- without penalty -- for
education, medical expenses, or a purchase of a first home.
G.I. Bill for American Workers: This proposal takes nearly
70 different training programs and consolidates them into one program
that directly empowers workers with skill grants and vouchers of $2,620
per year for up to 2 years. This proposal would be self-financing too,
since it uses existing funds from the previous programs. Workers who are
laid off or disadvantaged would also be eligible for income contingent
loans through an expanded Individual Education Account. This proposal
centers on accountability and strong consumer information which
should weed out bad programs and reward those programs that successfully help workers get the
skills they need for new and better jobs.
The Middle Class Bill of Rights embodies the New Covenant: helping
people help themselves. It creates new opportunities for working American
families who are willing to take responsibility to make the most of