Dem Senators have a tax plan that doesn’t give 90% of benefits to the ultra-rich
Democratic Senators Tammy Baldwin of Wisconsin and Cory Booker of New Jersey joined Friday in Milwaukee to release their own tax plan as one counter to the Republican tax plan that transfers trillions of dollars to the ultra-rich and nickels and dimes to middle-class and working class Americans.
Proving once again that Democrats haven’t learned a thing from Republican messaging successes, the two senators call their bill the “Stronger Way Act.” Sigh. And meh. Almost better just to call it by its Senate bill number: S.3231.
Not that the bill has a ghost of a chance of passage even with a resonant moniker until the extremist Republican control of Congress and the White House is overturned. But Baldwin and Booker’s proposal includes some worthwhile reforms that deserve a soundbite name that sings rather than thuds. Because, even though no Democrat-initiated legislation short of naming post offices will pass in the coming 16 months, it’s important that Democrats present to voters the kind of legislation we would pass if we had the political clout. And letting Americans know what our plans for making their lives better is one element in getting them to vote in a way that provides us with that clout.
The two senators commented:
“Tax reform needs to reward hard work, raise incomes and help working families keep more of what they earn. Too many people are being left behind by Washington and The Stronger Way Act starts helping them get ahead,” said Senator Baldwin. “The Stronger Way Act offers tax reform to reward work and a new partnership to invest in local jobs programs that will help raise incomes for working families.”
“We must realize the fundamental promise that if you work hard in America, America should work for you,” said Senator Booker. “Our bill will raise incomes and keep more Americans out of poverty by strengthening tax credits for working families and ensuring that hard work is more fairly rewarded. In stark contrast to the tax framework offered by President Trump last week, this bill will put money in the pocket of low- and middle-income individuals and families—not just the wealthy and the well-connected.”
At the heart of their proposal are two proposals that would provide more money to lower- and middle-income Americans—expanding the Earned Income Tax Credit (EITC) and the Child Tax Credit. These two ideas originally were put forth in the tax reform section of one the earliest iterations of the Peoples Budget, a product of the Congressional Progressive Caucus that has been rolled out in ever-more-polished form every year since 2012.
Baldwin and Booker explain their version:
Workers with earnings above 50 percent of the poverty line receive the maximum EITC, as do people working full-time at the minimum wage. This tax reform would reward work and benefit 63 million people, including nearly 29 million children of working parents.
For example, a single working mother with two children making poverty-level wages would earn a tax credit increase of more than $2,200 under this reform. A working married couple supporting three children on an income of $20,000 per year would earn a $3,500 tax credit boost to help promote income growth for this family.
The proposal also would reform the current EITC to give lower-income childless Americans a boost as well. It would give eligible workers up to $1,500 “to offset federal payroll and income taxes and help meet their basic needs.” A childless worker making poverty-level wages of some $12,500 now gets an EITC of just $180. Under the Baldwin-Booker plan, the same worker could get an EITC of up to $1,500.
In addition, S.3231 would make the Child Tax Credit refundable from the first dollar earned. That is, even a worker whose tax liability was zero could get a refund of the credit. The proposal would increase the rate at which the credit phases in and tie the maximum current credit of $1,000 per child to inflation to keep its value from eroding over time.
In unveiling their proposal, Booker called the Republican tax plan a “retreat and retrenchment” to a “bankrupt philosophy” that provides most of its benefits to the rich and to corporations:
“If we want to see real tax reform, it’s got to start by building a strong foundation in America,” Booker said. “And getting back to that American ideal that if you work a full-time job in this country, you will not be in poverty. You will be able to pay your rent. You will be able to get your American dream. You will be able to retire with dignity.”
A lot more is required to achieve progressive tax reform. The Peoples Budget, for instance, includes among its many proposals these two:
Stop companies from renouncing American citizenship to dodge taxes — There has been a surge in U.S. companies expatriating for tax purposes by purchasing smaller foreign entities and reincorporating abroad to dodge U.S. taxes. Forty-seven of those “tax inversions” occurred between 2004 and 2014. Inversions allow formerly U.S. companies to still reap the benefits of doing business in America without paying their fair share of U.S. taxes.
Current law prohibits an inversion if the foreign company makes up 20 percent or less of the new combined corporation. The CPC Budget would incorporate Reps. Levin and Doggett’s Stop Corporate Inversions Act, increasing the foreign ownership threshold to 50 percent, reducing future inversions, and raising $43.8 billion in revenue.
Tax Wall Street to fund Main Street — Financial transaction tax: The CPC Budget includes a tax on Wall Street transactions. More than 30 countries around the world have some form of financial transaction tax, as did the U.S. until 1966. This policy would tax stock transactions at 0.25%, bond transactions at 0.004%, option premiums at 0.25% per year to maturity, foreign exchange transactions at 0.004%, and futures and swaps at 0.01%. The tax would reduce reckless speculation that adds uncertainty while driving up prices of key commodities. It would raise $1.8 trillion to invest in America.
But the Peoples Budget has no more chance than Baldwin-Booker of getting through the GOP-dominated Congress. Like the senators’ proposal, it’s currently just excellent ideas that require a shift in who’s in charge in Washington before they can be transformed into actual reform.
Want more background on S.3231? Here you go.
(Originally appeared at DailyKos.)