Bush "tax cuts" TRIPLES the burden on students 14-17yrs old

Recently enacted tax cut bill takes more of teens' savings

Tripled tax rates on college funds could produce billions in 10 years
By DAVID CAY JOHNSTON
New York Times

The $69 billion tax cut bill that President Bush signed last week tripled tax rates for teenagers with college savings funds, despite Bush's 1999 pledge to veto any tax increase.

Under the new law, teenagers age 14 to 17 with investment income will now be taxed at the same rate as their parents, not at their own rates.

Long-term capital gains and dividends that had been taxed at 5 percent will now be taxed at 15 percent. Interest that had been taxed at 10 percent will now be taxed at as much as 35 percent.

The increases, which are retroactive to the first day of the year, are expected to generate nearly $2.2 billion over 10 years, according to the Congressional Joint Committee on Taxation, which issues the official estimates.

Overall, the tax bill that Bush signed Wednesday reduces taxes by $69 billion. Bush pledged in 1999 to veto any bill that raised taxes.

In response to a question about the tax increase on teenagers in the new legislation, the White House issued a statement Friday that made no reference to the tax increase, but recounted the tax cuts the administration has sponsored and stated that Bush had "reduced taxes on all people who pay income taxes."

Challenged on that point, the White House modified its statement 21 minutes later to say that Bush had "reduced taxes on virtually all people who pay income taxes."

Americans for Tax Reform, an influential lobbying group that seeks to reduce taxes, had led the drive to press politicians to pledge no new taxes. The pledge has been signed by 256 members of the House and the Senate, nearly all of them Republicans, and by thousands of candidates for state and local office.

The pledge commits signers to "oppose any and all efforts to increase the marginal tax rates for individuals and businesses."

Grover Norquist, president of the Americans for Tax Reform, said in an interview that he was unaware that the bill raised taxes and tax rates on teens with college savings funds.

He called the bill raising taxes on teens with investment income "a technical violation of the pledge" and said his group opposes all retroactive tax increases. He pledged to immediately begin a campaign to have the tax increases rescinded.