Library of Congress Cataloging-in-Publication Data

Contents

Preface

Federal Income Tax Treatment of the Family(

Summary

Introduction

Development of Current Tax Treatment of the Family

Personal Exemptions and Child Credits

Standard Deduction or Flat Exclusion and Itemized Deductions

Rate Structure

Earned Income Tax Credit

Child or Dependent Care Credit

Alternative Minimum Tax

Other Provisions

Equity and Distributional Issues

Vertical Equity

Horizontal Equity

Theories of Equitable Taxation

Family Arrangements as Personal Choices

Ability to Pay Approaches

Targeted Family Assistance

Applying the Ability-to-Pay Horizontal Equity Standard to Current Law

Marriage Penalties and Marriage Bonuses

Conclusion

End Notes

The Child Tax Credit: Current Law and Legislative History(

Summary

Introduction

Current Law

Detailed Overview of Current Credit

Alternative Refundability Formula for Larger Families

Definition of a Qualifying Child

Legislative History

Before Enactment: The National Commission on Children and the Contract with America

Taxpayer Relief Act of 1997 and Other Legislation

EGTRRA, JGTRRA, and WFTRA

EESA, ARRA, and P.L. 111-312

Policy Considerations

End Notes

The Child Tax Credit: Economic Analysis and Policy Options(

Summary

Introduction

Current Law

Who Claims the Child Tax Credit?

Economic Analysis

Equity of the Child Tax Credit

Efficiency (Behavioral Effects) of the Child Tax Credit

Impact on Work Choices

Impact on Having Children

Complexity of the Tax Code

Policy Proposals: Extending EGTRRA and ARRA

Impact of EGTRRA and ARRA Modifications to the Credit

Extending EGTRRA and ARRA Modifications to the Credit

Cost of Extending EGTRRA and ARRA Modifications to the Credit

Policy Options: Changing Other Parameters of the Credit

Increasing the Maximum Amount of the Credit

Reducing the Refundability Earnings Threshold and Increasing the Refundability Rate

Increasing the Phase-out Limits of the Credit

Policy Options: Reducing Complexity by Creating

Uniform Child Benefits

End Notes

Dependent Care: Current Tax Benefits and Legislative Issues(

Summary

Introduction

Current Tax Benefits for Dependent Care

Qualified Employment-Related Expenses

Definition of Qualified Dependent

Dependent Care Credit

Employer-Provided Dependent Care Assistance Programs

Interaction Between the DCTC and the DCAP

Issues for Congress

Expiring Provisions

Expand Definition of Care Recipient

Increase the Amount of Work-Related Expenses that Are Deductible or Credited

Expand the Credit to Allow More Lower-Income Caregivers to Participate

End Notes

Tax Benefits for Families: Adoption(

Summary

Introduction

Scope of Adoption

Domestic Public Agency Adoptions

Domestic Private Adoptions

Intercountry Adoptions

Overview of the Tax Credit and Income Tax Exclusion

The Adoption Tax Credit

Qualifying Expenses

Special Rules for Special Needs Children

Special Rules for Intercountry Adoptions

Limitations

Claiming the Credit

Income Tax Exclusion for Employer Adoption Assistance

Policy Issues

Phaseout (Income Limitation)

Federal/State Subsidies Versus Tax Incentives

Special Needs Children Versus Non-special Needs Children

Domestic Adoptions Versus Intercountry Adoptions

Expiring Provisions

Legislative History

The Small Business and Job Protection Act of 1996 (P.L. 104-188)

The Taxpayer Relief Act of 1997 (P.L. 105-34)

IRS Restructuring and Reform Act of 1998 (P.L. 105-206)

The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGGTRA, P.L. 107-16)

The Job Creation and Worker Assistance Act of 2002 (P.L. 107-147)

The Patient Protection and Affordable Care Act (P.L. 111-148)

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312)

End Notes

Federal Estate, Gift and Generation-Skipping Taxes: A Description of Current Law(

Summary

Introduction

The Federal Estate Tax

The Gross Estate: The Federal Estate Tax Base

Deductions from the Gross Estate: Reaching the Taxable Estate

Computation of the Estate Tax Liability

The Federal Gift Tax

The Taxable Gift

The Gift Tax Computation

The Tax on Generation-Skipping Transfers

Elections Available to Estates of Individuals Who Died in 2010

End Notes

Index

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