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Tax Breaks Likely to Go Toward Debts
Aired May 23, 2003 - 19:22 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: Next week President Bush is expected to sign the $350 billion tax cut approved by Congress today. Soon after that, the government is expected to start signing some checks and sending them to you.
About 60 percent of the cuts hit over the next two years and some quick math here will tell you that averages out to about $333 for each American. Many families will see a check this summer, but will, in the end, it help the economy?
Our Congressional correspondent Kate Snow takes a look at that.
UNIDENTIFIED MALE: Anything else?
KATE SNOW, CNN CORRESPONDENT (voice-over): Four-year-old Tori Steinlicht doesn't know anything about money, but her parents do.
SANDRA STEINLICHT, MOTHER: It comes in the door, out the door. As soon as it hits.
SNOW: Sandra and Nick both work full-time and even then they have to borrow a little from relatives to make ends meet.
STEINLICHT: Time for lunch.
SNOW: Tori (ph) spends her day at Minnieland Day Care with a lot of other kids whose parents work.
Back in 2001, President Bush's first tax cut gave parents a slight break, increasing the child tax credit from $500 to $600. The credit would have gone up to $1,000 by 2010, but the new tax cut would do it faster, let parents claim the full $1,000 credit right away, an extra $400 this year.
The government would churn out checks this summer, $400 per child, to more than 20 million families.
Minnieland's director says the extra money would help her families a lot.
KAREN ATKINSON, MINNIELAND DIRECTOR: Any bit of help, you know, is welcome, very welcome. Many of them are hanging in there, making their weekly pages and they're actually crying out for help. I'll get grandparents that will send us a check one week, or aunt and uncle helping here, there.
SNOW: The Steinlichts say they've used the child tax credit money to pay off debt.
NICK STEINLICHT, FATHER: It's another $400 and that helps. You know, it's just going to go towards bills.
SNOW: Economists say most families would do the same; rather than spend the money, they'd save it or pay bills. Would that jumpstart the economy? Probably not.
WILLIAM BEACH, SENIOR ECONOMIST, HERITAGE FOUNDATION: It goes to families that are not going to go out and use that money, we believe, to buy investments or to do the kinds of things that really create jobs.
SNOW: But Beach says the child tax credit would help long-term economic growth. As people pay off consumer debt, banks have more money to loan to businesses and that means more jobs down the line.
(on camera) As the tax bill is written, the child tax credit increase actually goes away after two years. Republicans say don't worry, a future Congress will extend those benefits. Democrats say it's a gimmick and part of the reason they say a tax bill is too costly, taking away from other priorities.
Kate Snow, CNN, Capitol Hill.
KAGAN: Some politicians argue that President Bush's third tax cut will not help the economy much more than the first two did, especially at a time when many states are forced to raise taxes.
Still if you want an idea of what your check will look like. You can go to "Tax Cuts and You" on CNN.com and that's where they'll tell you what to expect, based on your income.
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