Cory Booker: Expanding the Earned Income Tax Credit is a Racial Justice Issue

Is taxing the wealthy a racial justice issue? Sen. Cory Booker was asked at the recent She the People forum and couldn’t have been clearer: “ABSOLUTELY.” His recently-introduced Rise Credit, a Cost-of-Living Refund, would tax the wealthy to put more money into the pockets of those who need it the most.

“This is absolutely a racial justice issue, an economic justice issue, where you have Americans now looking at a nation where corporate profits are at an 85-year high and wages are at a 60-year low,” said Booker.

And he didn’t stop there. Senator Booker also laid out why caregivers deserve to be recognized for their work: “There are so many people who have to stay home and take care of a spouse with dementia, or a special needs child. That is work too, and they should qualify for a credit.”

Take a look at this short video on how Sen. Booker says his Rise Credit would help American workers.

Strengthening and Modernizing the California EITC to Fight Poverty, Inequality, and the Rising Cost of Living

The steep and rising cost of living and housing, coupled with stagnating incomes, means too many families in California aren’t feeling the prosperous economy. Many people live on the financial brink, as the cost of middle-class life has dramatically increased—from housing to childcare to medical costs—while wages lag behind.

At the same time, income inequality is at a peak, and is worse in California than in most other states:  CA claims both the greatest number of billionaires and the highest poverty rate in the nation. This dramatic disparity is on display in every corner of our state, and our current tax system exacerbates both of these problems -- many low-income people pay more of their income in state and local taxes than most other taxpayers, according to Institute for Taxation and Economic Policy data.

As a simple and effective approach to fight rising economic inequality and financial instability, we need to put more money back in the pockets of the working and middle-class people who need it most. California should do this by modernizing and expanding the CalEITC with a Cost-of-Living Refund.

We’ve worked for years alongside partners on how we might modernize and expand the state’s Earned Income Tax Credit to do just that:  put money back into the pockets of Californians. The policy details are in a white paper that we’re releasing today.

The white paper, “Strengthening and Modernizing the California EITC to Fight Poverty, Inequality, and the Rising Cost of Living,” lays out a vision and sets a clear course for achieving a more affordable and accessible California. We could build upon the existing CalEITC with these modernizations:

  • Expand the current CalEITC to reach further up the income scale to help Californians who are working while struggling to keep up with the state's rising cost of living;

  • Expand the definition of work by including unpaid family caregivers and students; and

  • Create an option to receive the benefit monthly so people feel it working in their lives.

California’s affordability challenge is formidable. It will take bold action and a sustained commitment over time to create a California where all can thrive. In the coming weeks the new Governor and state lawmakers will be determining their priorities for the year.

We believe an affordability agenda must be a top priority, and the new Governor and state leaders are poised to lead on policy to benefit millions of hard-working Californians by expanding and modernizing the CalEITC to become the most ambitious in the nation.

Lead the way, California.

Federal EITC Modernization bill introduced

Rep. Bonnie Watson Coleman of New Jersey introduced the EITC Modernization Act of 2018. This legislation incorporates many of the modernizations that have been explored by Economic Security Project and other organizations, and is an exciting development in this policy space. Together with the GAIN Act, the legislation proposed by Rep. Ro Khanna (D-CA) and Sen. Sherrod Brown (D-OH), it approximates pretty closely what a first version of a Working Families Tax Credit could look like at the federal level.

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"A Tax Cut Democrats Can Back" -- WSJ op-ed by Rep. Khanna & Ann O'Leary

“The plan would also double the EITC for working families and expand the definition of what counts as work by including caregiving and education, to help ensure that families can take care of one another, get the skills they need, and still get ahead. It would increase the credit for childless workers almost sixfold. It would make the tax code fairer, benefiting half of American households. We also want to make sure Americans don’t have to wait for tax season to get this boost or go into debt because of predatory lenders. We believe these IRS refunds should be available monthly.”

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New poll: Tax credits for workers vs more tax cuts

We wanted to test our hypothesis that putting money back in working and middle class people's pockets would be a powerful message in opposition to more tax cuts benefiting the wealthy and corporations. (Though there has been conflicting reporting, Ways & Means chair Brady said today he'd start moving legislation next week.)

We did a 1000-sample national poll last week testing a known effective message opposing tax cuts 2.0 (an Americans for Tax Fairness message) with two endings talking about restoring a fairer tax code, one saying we should invest in infrastructure and other needs for our families and communities, and one that ends:

"Instead, the rich and big corporations should pay their share of taxes and we should invest in expanded tax credits for working families–real economic relief for working and middle-class Americans who can’t keep up with the rising cost of living and housing."

The message on tax credits for working and middle-class people boosts support by 16 points: +9 among Independents, +15 among Democrats,  and +24 among Republicans.

This polling data is here.

Talking points: Tax reform for working and middle-class families

 

  • Current tax reform efforts only benefit the wealthy: The Republicans’ tax scam for the rich recklessly drives up the deficit to justify their cuts to Social Security and Medicare. Now they are coming back for even more huge additional tax cuts for wealthy campaign donors and corporations, giving another massive windfall to the richest Americans. [This language comes from Americans for Tax Fairness]

  • Instead, the rich and big corporations should pay their share of taxes and we should invest in expanded tax credits for working families—real tax reform for working and middle-class Americans who can’t keep up with the rising cost of living and housing.

  • The cost of living and housing is climbing steadily and wages aren’t keeping up. That not only hurts people who are struggling in poverty, but also squeezes millions of middle-class families – people who live paycheck to paycheck and are one car accident or unexpected medical bill away from financial disaster.

  • We should reform the tax code to make it fair and give poor and middle-class people much-needed economic relief through tax credits for working families.

  1. We should massively expand the Earned Income Tax Credit (EITC) by making it available to younger workers, middle-class workers up to $75,000 of income, and workers without dependent children. The GAIN Act, introduced by Rep. Ro Khanna (CA) roughly doubles the EITC for working families, and complements an increased minimum wage so no one who works full-time lives in poverty. Similarly, the EITC expansion bill by Rep. Richard Neal (MA) would essentially ensure that the federal tax code doesn’t tax childless wage-earners aged 21 through 64 into poverty.

    • The Earned Income Tax Credit is a benefit for low to moderate-income workers and couples, with an increased amount for those with children. Since it began in 1975, the EITC has become one of the country's leading anti-poverty programs, pulling more people out of poverty than SNAP and housing subsidies combined.

  2. We should also modernize the EITC in a number of ways, making it available to people who are giving back to society in other ways, including family caregivers and students. Additionally, a monthly option for the EITC would give recipients a regular drumbeat of financial stability. These provisions are in the EITC Modernization Act introduced by Rep. Bonnie Watson Coleman (NJ).

  3. Finally, we should expand the Child Tax Credit (CTC) to help millions of struggling families with children.  For example, Rep. Rosa DeLauro’s (CT) Child Tax Credit Improvement Act would index the value of the Child Tax Credit with inflation and increase the value of the credit for families with young children under age 6.

    • The most recent Census report on the Supplemental Poverty Measure showed that refundable tax credits, specifically the Child Tax Credit and the Earned Income Tax Credit, do more to lift children out of poverty than any other federal policy. Increasing the value of the Child Tax Credit for families with a child under the age of six has the potential to positively impact a child’s health, education, and future.

  • All together, these working families tax credits will provide a ladder out of poverty and a cushion of financial stability to help hard-working Americans get ahead. At the same time, they will fight rising inequality that threatens our democracy, and make taxes fairer so that the wealthiest pay their share and working families can thrive.