This tax policy change could transform American lives
Right now, many Americans are filing their taxes and finding that far from getting the big tax refunds President Trump promised, they actually owe the IRS money.
And the President's response this week? Making his tax breaks for millionaires and billionaires permanent in his budget, while slashing the basic programs working families rely on to get through rough times and make ends meet.
Yet again, the President has betrayed the workers he promised to fight for when he sought their votes.
Instead of making the giveaways to the richest Americans permanent, we need to throw out the President's tax law and overhaul our tax code to make hard work pay off for everyone, no matter who they are or what kind of work they do.
Right now, the cost of everything is up -- from health care to rent, from child care to college tuition. But for most workers, according to the Bureau of Labor Statistics and others, wages have largely remained flat. Even people with ostensibly middle-class jobs don't feel stable.
They need more money in their pockets to keep up with the cost of living and the uncertainty of this economy.
That's why we want to double the Earned Income Tax Credit for working families and make millions more people eligible for it.
We've seen a lot of ideas floated to make our economy fairer and fight income inequality. Expanding the EITC, which gives a percentage of their earnings back to millions of low- and moderate-income working Americans, needs to be at the center of those conversations.
It's the most effective tool we have to put more money in the pockets of ordinary Americans. It's simple to administer, it's repeatedly demonstrated its success, and it gives families what they need most -- extra dollars. We worked to expand the credit and make it permanent in 2015, and the following year, it lifted nearly 6 million Americans out of poverty.
For those currently eligible, this credit gives families more economic security and a bridge to the middle class. But it leaves behind many others who would benefit from the stability it provides. Right now, a single worker without children making just $15,500 a year is barely above the poverty line yet earns too much to claim the EITC. And if those workers are under 25, they can never claim the EITC, no matter their income.
Our plan would fix that, and dramatically expand the EITC. Think of it as a cost-of-living refund. The plan would raise the maximum credit for all earners and raise the income threshold to acknowledge the fact that a dollar doesn't stretch as far as it once did. These changes would mean anywhere from $3,000 to $12,000 in the pockets of nearly 50 million Americans, according to the Center on Budget and Policy Priorities.
Expanding the EITC would recognize a fact we don't acknowledge enough in this country: there are all types of work, some of which never get the recognition -- or the compensation -- they deserve. For the first time, students and caregivers would be able to claim the EITC.
When a daughter takes time off from her salaried job to care for her mother with Alzheimer's, that's still work. When a new parent quits an hourly job to take care of child, that's still work. Our society -- and our tax code -- need to recognize that.
There's something fundamentally wrong with an economy that is supposedly inching close to full employment, yet in which families are so financially unstable that according to a report from the Federal Reserve Board, four in 10 Americans say they couldn't afford an emergency expense of $400 without borrowing money. We know what happens to so many of those people -- if their car breaks down, or they have to have an unexpected surgery, they turn to payday lenders and car title loans that trap them in a downward spiral of debt.
We need to crack down on these predatory lenders, but that alone won't solve the problem -- people need a way to access credit when emergencies happen, especially in an economy where they're paid too little to save. That's what our plan will do, by letting workers claim a one-time advance on their EITC refund. With these changes, millions of Americans would have an alternative to expensive, predatory payday and car title lenders.
When hard work pays off, everyone can afford health care and housing. They can save for emergencies and for retirement. They can make decisions about where to live and when to have children based on what's best for their families -- not just what they can afford on a meager paycheck.
That's what our EITC plan does -- it makes hard work pay off for millions more Americans.