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.
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.
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).
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.