I am both fully employed and a new dad, so my time for blogging has decreased dramatically since last summer, when I was neither fully employed nor a new dad. It therefore takes a special bit of inspiration for me to spend my limited free time posting rather than watching Crystal Palace or playing Red Dead Redemption 2 again. Unfortunately, today’s inspiration comes from the Democrats, who seem to have taken their midterm messaging strategy right from Ronald Reagan.
Over the past couple weeks, everyone from progressive influencer and congressional candidate Kat Abughazaleh to failed presidential candidate Cory Booker to future failed California gubernatorial candidate Katie Porter to extremely successful used car salesman (and congressman) Don Beyer is proposing policies that would eliminate taxes on low and middle income earners. While superficially this might seem like a decent idea, ultimately it undermines efforts to create a just and equal society.
For illustrative purposes, I’ll talk about Beyer’s proposal, which is also sponsored in the Senate by Chris Van Hollen of Maryland. They propose that single tax filers earning under $80,500 would not pay federal income tax on the first $46,000 of earnings. These thresholds would double for couples filing jointly. In addition to these cuts, they propose a series of surtaxes on earners with income over $1 million. The proposal has been scored by the Yale Budget Lab, who find that it would be approximately budget neutral, with the cuts costing $1.6 trillion over 10 years and the increases raising roughly the same amount.
Yale also looked at the distributional effects of the proposal, and I’ll highlight what I think is the most important finding: families in the bottom 20% would only see their incomes increase by 0.2%. Only 6% of these families would get a tax cut. When you think about it, this makes sense, because most of these families likely pay little to no federal income tax as is. Even though it makes logical sense, it’s also remarkable: $160 billion per year and almost none of it goes to the people who need it most. The biggest winners from this policy are the in the middle quintile of earners, who see a 2.7% increase in income.
Imagine if we raised that same amount of money in new taxes on the wealthy, but instead of cutting taxes on the middle class, we invested it in social programs that helped the people who need it most. The expanded Child Tax Credit, which would reduce child poverty by nearly half, would cost about $1.3 trillion over 10 years. (Even though this is also technically a tax cut, it does not suffer from the same distributional issues as the Beyer-Van Hollen proposal because even families with no earnings could get the benefit.)
Alternatively, if you don’t care so much about kids, we could fund the Supplemental Security Income Restoration Act, which would cut poverty among SSI recipients from nearly 30% to 11%. With an annual cost of $61 billion, we’d still have nearly a trillion dollars to play around with. We could tack on national paid family leave for $225 billion over the next decade without breaking a sweat. Universal free school meals hasn’t been scored as far as I can tell, but during Covid, when over 90% of kids got free school lunch, the cost was about $30 billion per year, so we could probably swing that too.
I could go on and on. The point is, for the cost of these tax cuts, we could go a long way toward building the kind of society that gives people a hand when they need it. The kind of society where when something goes wrong, you’re not worried that you might lose your home or go hungry. You can’t do that with tax cuts. It’s disheartening to see so many Democrats fail to realize that.
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