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2020 Senate Race Featured Montana Politics Steve Daines US Politics

Steve Daines Raised Tax Rates on Kids in Indian Country, Harming Their Economic and Educational Opportunities

When he held the Senate hostage to ensure a massive tax giveaway for himself, Montana Senator Steve Daines also helped pass a tax bill that

No word from the Senator on college kids or tribal members, but you can always count on him to look out for the plight of the Bozeman-area real estate developers.
massively increased taxes on kids and young adults in Indian Country.

Nicole Elliot notes that the Republican bill Daines championed has tripled the tax rate—to the highest rates in the code—for per capita distributions made to young tribal members:

However, the modifications to the Kiddie Tax in the Tax Cuts and Jobs Act of 2017 will in some instances increase the tax rate and thus the overall amount of tax due from many tribal members receiving these distributions. In many cases, this has an unintended consequence of doubling or tripling the tax rate paid by young Native Americans on financial support they receive from their tribal governments.

For example, if a 20-year-old Native American student earns $18,000 from a part-time job in 2018, she would pay tax at an effective rate of 10 percent. But if she received that $18,000 as unearned income as a per capita payment from her tribe, she would be in the top tax bracket for trusts and estates of 37 percent and pay tax at an effective rate of 26 percent – a difference of almost $3,000.

The consequences are more than financial. Elliot notes that the changes in the law will actually encourage kids to drop out of school:

To make matters worse, both the 1986 Tax Reform Act and the 2017 Tax Act applied the Kiddie Tax to unearned income of children under age 18, unless they are full-time students, in which case it applies to unearned income of children and young adults up to age 23. Thus, Congress has structured the law in a way that encourages individuals to drop out of school. The effects of this perverse incentive is particularly felt in Indian Country, where the tax burden associated with per capita payments is significant.

And Republicans will be even less credible if they claim this was just another “mistake” their effort to draft the law. The Wall Street Journal notes that while Republicans were raising the “kiddie tax” on young Indians, they were lowering rates for those at the top of the income bracket:

At the same time, many children of top-bracket taxpayers will be winners under the new law, says Mr. Steffen. If such a child has $4,000 of interest or a payout from an inherited individual retirement account, her Kiddie Tax bill would have been about $860 last year. This year it drops to about $300, due to lower rates for trusts.

As we have noted and noted and noted, the 2017 tax scam is the perfect embodiment of what Steve Daines believes. Instead of using his influence in the Senate to protect college kids, tribal members, or military survivors when a razor-thin margin gave Daines the one taste of power he’s likely ever going to enjoy, he demanded massive tax breaks for himself.

And now, when thousands of Montanans didn’t see the tax relief he promised and some have actually seen their tax rates increase, he’s demanding that the tax cuts that benefit him become permanent while the pittance he and Trump snookered the American public with will fade away.

No word from the Senator on college kids or tribal members, but you can always count on him to look out for the plight of the Bozeman-area real estate developers.

Montana needs a Senator who understands that his role is to protect the families who make up this state, not just the few people who inhabit the same few square miles or the same tax bracket where he lives.

If you appreciate an independent voice holding Montana politicians accountable and informing voters, and you can throw a few dollars a month our way, we would certainly appreciate it.

About the author

Don Pogreba

Don Pogreba has been writing about Montana politics since 2005 and teaching high school English since 2000. He's a former debate coach, and loyal, if often sad, fan of the San Diego Padres and Portland Timbers. He spends far too many hours of his life working at school and on his small business, Big Sky Debate.
His work has appeared in Politico and Rewire.
In the past few years, travel has become a priority, whether it's a road trip to some little town in Montana or a museum of culture in Ísafjörður, Iceland.

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