So what’s better? A tax deduction plan like this or a tax credit plan like the one Coburn is sponsoring?
RE: So what’s better? A tax deduction plan like this or a tax credit plan like the one Coburn is sponsoring?
I personally prefer a tax credit.
If I were ever faced with a hypothetical choice between a $1000 tax deduction and a $1000 tax credit, I would want the credit.
Unlike a tax deduction, a $1000 tax credit reduces your tax dollar-for-dollar ($1000). On the other hand, a tax deduction reduces your taxable income by $1000.
The resulting amount of tax you save depends on your marginal tax bracket (in everyday language: your tax bracket). If you are in the 25% tax bracket, a $1000 tax deduction reduces your taxes by $25.
But either one would be preferable to the monstrosity we have now.