TAX-CREDIT IMPACT

Imagine the economic impact of a new industry in Cape Girardeau County with an annual payroll of nearly $7 million. In all likelihood, most of that payroll would be spent in stores, to purchase automobiles or to buy houses in the county. Sales-tax revenue from the increased spending would benefit city and county governments. Unspent earnings would be invested in financial institutions to be re-invested in the community through loans, or in stocks to provide working capital for industry. The additional retail sales generated by the new payroll would create new jobs.

Sound good?

Although no such industry has been announced, all of these benefits would be generated by the proposed $500-per-child tax credit that is included in the Republican plan in Congress to balance the budget in seven years. Based on the number of children being claimed as dependents on tax returns in Cape Girardeau County, the credit would total almost $7 million in the fiscal year that began Oct. 1 for taxpaying families. This is the amount of money families here would have to spend instead of sending to Washington.

Over the next seven years -- the timetable for balancing the federal budget -- the proposed tax credit would result in more than $35 million for the county's taxpayers. That is $35 million in spendable income that would flow into the local economy.

The tax credit, of course, is for taxpayers with children all over the country. The total economic impact nationwide would be some $22 billion a year. Moreover, the tax credit is aimed at taxpayers who need it the most. The credit wouldn't be available to upper-income taxpayers. And wage earners at the lower end of the spectrum would have their tax liability wiped out by the credit.

The $500-per-child credit is one of the at-risk components of the balanced-budget agreement currently being negotiated in Washington. White House bargainers contend any tax cut is inappropriate when the nation is trying to put its financial house in order. But a tax cut, particularly one that benefits those who need more spendable income the most, has the effect of producing more revenue for government, not less.

What a Christmas present it would be if not only agreement could be reached on balancing the budget, but also the proposed tax credit was left intact.