« The Weeds

5 big ideas to use tax credits to fight poverty

2019-06-14

Meg Wiehe from the Institute on Taxation and Economic Policy explains the leading progressive tax plans in Congress and how they differ from Trump’s tax cuts.

Related reading:

Understanding Five Major Federal Tax Credit Proposals

American Family Act

Working Families Tax Relief Act

LIFT Act

LIFT+ Act

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This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
Yeah. This is Marquez Brownie Acre Amphibia hd, and this is Andrew Manga Nellie. We will introduce you to our podcast way, form the new sedition to the Vocs media podcast network, so I've spent over ten years reviewing type Gregson consumer electronics for millions of people on the incubation to channel and now on the way form part asked Andrew, and I use that experience to dig even deeper into latest tech for smartphones too. I max to electric cars. So if you're a gadget, lover or attack head or if you just want to figure out whether the latest gadget is worth your harder in cash, give us a lesson sacred fine way, formed the MTV Ftp cats on your favorite Pakistan. Every Friday see over there. There is no weeds ear aspect of american public policy than the details of the tax code
a lot of ideas from congressional democrats about how to improve the tax, goat and, of course, ideas from Republicans as well. I was really excited sit down with MEG. We hear the deputy director of the institute on taxation. You cannot make policy to help understand what changes have been made recently and what may be coming progressives get a chance to Sir have their way Maastricht. Hello, welcome to another episode and weeds, I'm a box media package network. I met in places I'm doin by make we. She is the deputy director of the Institute on taxation and economic policy. We want to talk about taxation and economic policy, so it's a good. It's like it's. It's a really match, I'm she's she's, one of the others of a new report, which is great that looks at five different sort of major proposals that Democrats have going on tax credits and
wanna. You don't understand what those are, how they, how they work, but to start, I think it is helpful to understand the contacts we had a major tax cuts bill. These are grads talking about tax cuts and of some kind or another. I remember I remember that tax Bela was now. I can you my taxes on a postcard and also It was gonna put bowser like four hundred dollars for it. thousand dollar, four thousand two hundred somewhere about delivery, and everyone agrees Balkans. So that's that's great it's all about four thousand hours, that's. Why do we need more right? The two thousand seventy in tax already called the tax cuts and jobs act at me or for it turns the trumpet GNP Tax law, the taxpayer. Whatever you may want to call it. It was your if you're cool the text, I've never heard that went before I have to start using. That are a few things for the things other than it was a farce. Reaching your far reaching tax overhaul.
I would not call it true comprehensive tax reform, but but it was sort of sold on he promises right. There was a promise that it was good have a major boost to the economy. There are promises that the bill, a pay for itself right. I'm a one point: nine trillion dollar tax bill over their course of ten years than, of course, some of its temporary some of its permanent. You know There was a belief by many republican, lawmakers and and determination that it would pay for itself, as it has not given Brady say it's not gonna page just said he just conceded the fact, which has to face that it's not gonna pay for it found that very ago and there's no other research congressional research service came out with airports, not paying for a fright with a promise. As you said, another big promise during the debate was that this sort of supply knew what we supply side very rightly
Republicans always have led with that doing these big tax cuts for corporations, the rich would mean that workers would get four thousand dollars in a bucket that didn't happen. So this is a tax will the the bulk, of the benefits no eyeballing bawling added. It looks like eighty to ninety percent wine of going to the richest twenty percent of people and to foreign investors. and that's because this was a taxicab really aimed at businesses so so that's who owns businesses right? It was a tax. aimed at helping profitable corporations shareholders, both those who live in this country and those who doubt and the richest related rent is one percent, but, as you said about other the benefits that went to people living in this country, roughly a lot
over. Seventy percent went to the top twenty percent. You mentioned the foreign investors part foreign investors know those who, on stock in this country, got a bigger tax, got an aggregate, then the bottom sixty percent of taxpayers in this country Every taxpayer, every household in this country, making seventy thousand dollars or less in the aggregate got less than we gave away to. Foreign investor serves to that's tones because a huge amount of money here is going to business owners, and so foreign people on american businesses. Poor Americans do not own american businesses, so foreigners get bigger tax cut, that's right, but that ferry and an enemy there? You know there's a theory to this. I will get a right wing or in here some time to explain it properly, but you know I mean but the and the idea is that when you cut taxes on businesses, that's kind of crime,
investment, all kinds of wonderful, secondary effects. Why? But the primary impact is a sort of windfall for shareholders of public and private. Exactly exactly, and what we saw last year was a record amount as stock by backs happening. We saw a record amounts of compensation and bonus packages. What we didn't see was a record amount of new jobs in new jobs created just because of the tax act mean there. There were new jobs created that many of those corporation said they were already in the pipeline. They had nothing to do with, with the tax law, and we certainly didn't see that promised wage bill is that for health handlers did not. yeah me worthy of you. Look a sort of you know: economic growth staff begun, we grow, but it grew the year before
It really a before, and I think too often, some of our law makers measure the economy by the stock market. That's not how families in this country- and that's not how low and moderate middle income families are measuring their economy there. Thinking about how it impacts their daily lives there not watching the stock market right there watching their bottom. Their bottom line and the fact of the matter is for, for many families in this country, economic and security is, is a real problem waiting. I mean it. I remember having read as statistics on this I mean it's like the bottom half of the income distribution doesn't on any stop right at all. barely right, exile in- and you know it so it's very, very concentrated, even though its prominent in yeah, I mean it's should a fine. They run the stock market every day, so you can always have a story about. It is important and some level, but it doesn't like
impact the typical person now now it in and enriches and enriches shareholders. Him again tend to be at that Britain at the income distribution. Ok, we're looking out, we did serve five different democratic plans. These are plans with tax credits, there's a sense in which they are tax, gods decision was attacks guide these differences between them. But but philosophically I listen with taxes where there are two kinds of things that people worry about about tax. It's right. The light conservative economist, who has a complicated concern about incentives in economic growth and then I think, like a normal persons concerned, which is that, with higher taxes, you have less money with lower taxes. You have more money,
an open about. It. Just doesn't give very much money to people who don't have much money, and these democratic plans are aimed in a sort of more banal way at look at people at the bottom. Twenty forty sixty percent of the income distribution and and give them more money right I mean all of them- are completely different way. A different approach to you We could use the tax code as an effective tool to deliver on the promises that were made under the by Republicans and by the temper Ministration under the two thousand seventeen tax law. They would actually deliver a cash straight into the pockets of people and families across the country right. They would have a positive economic impact that the families who would benefit the people it benefit from any of these proposals aren't gonna use the money to buy back stuff right. They're gonna use the money to buy groceries, to buy clothes, improve their housing situation for transportation.
I'm pay off medical bells right, they're, gonna, put that money straight back in the economy and in our have a real you, no immediate impact on their lives and helping them against me of it. So let me ask you really similar question: what is a tax credit? Because these are you the charred cause, these new tax credit proposals so like what? What is the weather couple away? so think about me. All of these proposals, very importantly, are refundable. Not all tax credits are, but so, if you, if you start the basic way to think about it, as once, you ve walked yourselves through the tax code gone through all of the deductions and the adjustments come up with your taxable income. We apply it their rates. In brackets, your left with Europe tax light belly. How much you oh
and the credits always then come afterwards. Now that we have, we found the Euro two thousand dollars, then we apply credits that would further reduce that tax liability. Its have much more targeted, I think effective way to reach to reach land mutter. Come household, but only if there were a fund of all a nice, that's the truth, because slowly in Congress, so you have deductions versus credit, sweat, cemented is due in my term attacks and I'm saying: ok, I get to deduct I am, I don't know my my home mortgage interest, and so that comes off the top of my ink right, which then reduces my taxes, but how much it reduces my taxes has to do with what rate I'm very likely so exciting. So if you Ridge and you're paying a high bracket, the value of a deduction is really high. Exactly you're in a low bracket. Its allow exactly ends here the changes where it is possible that the amounts
People in this country actually aren't deducting of their homeowners growth attempt here mortgage interest anymore, because one of the big changes and the tax law was to you in us significantly increases eyes of the standard and accept that item rising- and I think I know me most- people are really think only nine percent are left itemised because of lots of changes mean again. The tax law had lots of lots of between parts, We used the standard action, but it also got rid of personal and comes out, and so now we have this big deduction that most people are taking. That's that's a by violent status. What are your pulse holder is your household or marrying that we're moved that the deduction exemption they a few well that was sort of based on on family size. So serve as the new twenty four thousand four hundred irish introduction seems big, but not when you taken consideration that we're moved a little over four thousand dollars per person. You are also ape Alta to Jack before, but so credit just sort of. In the end product comes in. It's like, I know, whatever
and I get a credit, so I just strike it out. So it's equally valuable, no matter what bracket you're an except, then we get into the refund airliner melody gas, as some people fairly large number of people don't when he and you don't know me- and you have a twenty four thousand four hundred irish introduction Reda Me- that's so anyone with income, if europe- that's we're married household with income about about our less one, you know, one hour, so there are fundamentally really matters mean, particularly if the interest is to use the tax call code as the tool as the delivery mechanism and at which to boost the incomes of Lord minor income families. If you dont make their credit refundable than you're, not helping anyone right giving the benefit. So refundable simply means if one example would be, if you're part of your tax liability, a thousand dollars after you, ve walked through the deductions and adjustments and the bracket and rates, but the valley
your earned income tax credit is three thousand dollars. You would get a cheque for two thousand dollars of that, so that different so would offset and no a rigid only one of the original reasons why the urn income tax credit was created was too. You know, offsets, regressive impact of payroll taxes, but also as an asset as an income based. So here I bet weeds listeners, know this but meta name. If you don't mind, I find it confusing, because people think that if you, you know pay tax on buying cigarettes, that's a cigarette tax. If you pay tax base, an income that income tax, but act Lee does income tax and there's a payroll tax which, for people of modest means, are very similar right in there in their structure if you earn all your money out of wages, it's all like the same tax if the same tax is one flat tax
and it doesn't apply to anyone to earnings above I believe this year around a hundred and thirty seven thousand dollar so if you read you re, making three four hundred thousand hours a year is a huge difference between these taxes, but for people modest means it. It's gonna feel very similar in all, like turbo tax, calculates them in a consolidated way, but when we say people don't owe income tax right, there still paying tax, they pay in taxes, and this is what my biggest just pick us up. He is. I also work on state policy is now they're denying pain, payroll taxes in the way described on, but that they're paying their pain, state, local taxes, their pain, property taxes. Homeowners or as renters they're, paying tax the butter a level under the state level, their pain attacks. Every time they put gas into their car rate, their pain there, their pain cells, taxes whenever they make purchases of goods or services in their stay there, their pain state income tax at Renault State Income, tax
and is progressive as the federal codes that so the idea that anyone there, but I d, be hard pressed to find a person in this country whose not pain, attack, so the refundable tax credit it lets. You pay Julie, less than zero income tat exactly thus offsetting some of this other tax liability and because the progressive structure of the income tax. If you're trying to help you know people in poverty, people near poverty. It has to be inevitable or you don't help, and I don T know I dont think about. I don't think about it. S cut in cutting taxes as a as attacks got. I mean in theory. Yes, on paper, that's what it is, but again I I think I think the reality I hear is that the tax code has historically been and can be. very efficient tool for for delivering the resources that fit in our families and people?
living in kind of living on the brink, indeed, to kind of meet the high cost of living right. It's more of that sort of the mechanism where we're all doing taxes every year anyway for hate, so there's a high there. There could be better, but there's at pre high participation rate for those were eligible for earned income tax rate in childhood and so I think that's another reason why all these proposals make sense, because their building off of policies we have had place. I'm plays for four years on that are that are proven. We nor effective ways to help. That's a great point because you know one thing that I remember hearing and grounded in the discourse. When I think said, our hers was talking about her version of this, but It applies all them. Summers like leg. Why are progressive talking about tax cuts you now we should be doing, but above all, by in
I think the point you are making their right to decide whether you call this attacks cut or not. On a conceptual love all right. It's all the same without a right, but this is an institutional mechanism. If you're gonna have a program that gives people mine, he somebody has to do the giving of the money, and somebody has to verify that their eligible for the mind right. The IRA's already exists, exactly are already doing. Man said sit super efficient, super effective, doesn't mean
we shouldn't- be it's not it's not the only thing we should be doing me. A deep structural half were re. We need to be addressing the simultaneous Lee, but I think this is a way of her people describe it as a shovel ready now shovel ready, wade too to help those who need to help the most immediately that have like a media and lasting and lasting impact would live with a lot of noise between the pings, the dings. The emails labelled urgent that aren't really that urgent, it's hard to cut through the static zero. When on the things that really matter just like, we can train our bodies to be better running faster lifting heavier. We could train our minds to stay focused to all the noise we live with step. One download space hits bases and have loaded with guide. You meditations designed offer a daily dose of mindfulness concessions for every situation like three minute s, away: meditation, when you're overwhelmed by the day and even meditations, you can do what you kids, when you're all of run by the day had space has been like a really cool
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Hence the Bob on Apple Podcast, Spotify or your favorite podcast, APP, ok! So, what's let's, let's get into it. Let's get into! Somebody is what do we have a meeting Well here. Well, when we read through parent, we had five proposals on the table. I feel like there's a deeper puzzled every day, we go, we may have have even Mars. We can start start with these five. So other five proposal it S. Two of them, I would say, are working to use, rebuild off of the earth and contacts credit organ created in the seventies. It is part of that of credit. That was meant she really incentivize and rewards,
work. It does very and family size the current the currency that a little bit more of a credit for for having, if you have more kids kind of recognising that the higher cost of of providing providing for those for this short and so the two of them take that framework build in build off of ends right that the cost of loving living refund acts that was introduced by send our share in brown and representative Roccanera is is actually just a major expansion and Ireland the tax credit. So that's it! That's that's one. The working families, tax relief act has both expansion to the earned income tax credit, but also includes an expansion to the child tax credit. I think, just to take a step back. I should say that all of these proposals the things that they have in common is that they generally all give more money to more people.
many of them. Also in our I've said numerous times at these contacts, garden earned, income tax credit are proven, ineffective but there are some underline flaws with both of them that, frankly, the taxpayer could happen said half crying dinner or consent and so there are ways at those are addressed, which I can talk about. Most of these proposals also really kind of expand the definition of work or thing bout, including including more people into the into the exciting credit who are currently no currently left behind. So either students are caregivers. Some some include emigrants, as are finally with with a ten one, Cloots resident supporter ego. So there is kind of a thinking about the newest resolve. Representative tallied includes non working, non working, poor, so there's just kind of a thought about who who were going to help and how we have to expand on the definite
of of work in the most of them. Also try to make the current credits a little bit more. I guess he's our friendly or ethical right, so there's reconnaissance common themes ready so going back there are in the cost of living. Refined act is really is a major expansion of their end and come tax credit. A pretty much doubles the size of the current credit, the current maximum credit that surround six thousand dollars. Around twelve thousand dollars on this proposal. So the way the way he juicy works is at first, are in very let all the APC only gives you a letter all right, then, as you as you get more, it gets bigger because it's trying to basically encourage you to work for right well in and then MAX's out at, like you are a full time, low wage worker and then, as you start, getting more prosperous it phases back,
out again exactly it was actually so. It's like a hill and and puzzling refund act. Basically, like makes it a mounted a bigger guys. Exactly it doesn't change mean you're right. I think that's hopeful fire for people to understand that the current credit has, may God I'd call a long face and you have to have earnings rights, the credit space, how two percent intervenes once you get to a certain amount of earnings you you ve, hit that MAX credit and right. You stay God, it's like a hell with the plateau right, the likelihood tat had been Plateau Army, keep that maximum credit, and then it then it begins to phase backed phase back down your absolute right. The causal greenery fund actress takes that help
makes it into a mountain. It doesnt really changed the way, the eighties. He works, it doesn't really change, doesn't change the phase and rate at just really boost the amount of the credit and the other thing, but he had you see. That's a little curious you you mentioned this before, but it's not a pure work subsidy, because it's also scaled to the size of your family, bright red. So it's it's, but it's not appear family subsidy because it failed to your working right so so the idea. I've been a guess if, if you try to understand philosophically way, they understand that parents of children have more economic needs and that the government should probably do something to help you, because the labour market doesn't care you have extra right children family made. Since the government needs to do something but They didn't want it. We create the old ABC welfare situation, where the government is
giving low income. Women bunny TAT, not work, so they said we're going to supplement your earnings and we will make the supplement bigger when you have more children, but you still have to sort of work in the labour market to get the subsidy exactly in the most recent expansions too there and then come tax credit really play thought about how do they? They used to be that the MAX credit was only available to you married or our ties in appearance with two kids, and they did an extra boost for the for the for the third can, I think, You know all of the proposals here, but the ones that are really addressing the eighty see that was so those fundamental flaws. I was talking about the group. That's really been left behind from reason expansions to earn an income tax credit are workers without children and the home right. Their maximum credit is around five hundred and thirty
tolerance a year and is unavailable in around fifteen sixteen thousand dollars of income. It's not the IPCC, as is not really working for for those people there also the only group who were who could be further tax at the poverty and so the cost of Living Refund act and the working families tax relief act while they have a significant sort of boost and the size of the credit for families with children, the boost prefers without children is, is significantly higher. It's still lower credit amount, but in terms of lake, where we're going to prioritize and put our investment, the working families, tax relief act and, in particular, puts more investment and workers we have an increased and some of them I mean a ism people who are childless. Forty, I do see purposes in some cases, actually do in fact have children. There has not the custodial, parents of exile. Here, essentially, the fathers of single mothers
It's not a gendered law it I'd just in in practice. That's a part of the population right! That's why I think says a sort of my I've been training myself to favour. This really isn't working down toward her in the home, which is such a mouthful and what we need to go back to the palace. Perhaps they re is not not necessarily that they have a child there's just not a child living in the home right so issue an end. So a lot of the sort of rhetoric and serve you hear about that's why it is that is, is focused on the idea that we ve had a sort of less educated man dropping out of the workforce and lower marriage raids and stuff in there, and that and that this is a sort of a population that has been left. out of american social policy. Previously, that's like a big focus there's a big fat guy setting. That's definitely no one of the reasons why it is a priority politically in the working families, tax relief ACT of Sudan.
cost of living refund and working families, tax relief yeah are built around the edges, see expansions consul living as a little bit of bigger programme, the much bigger programme, and that's because it takes the size of the credit he known centrally doubles the size of the credit and what is working. Families tat was the working here Tax relief acts it's really mornings as an additional components, the only if the only plan on the table that addresses both earned income, tax credit and the child talks, credit and a single proposal. So on the on the ACC front, just it does do a small basically, but there's the benefit by about twenty five percent fur for workers with children again does think increases their credit for the workers dodging home by about six times, but it also It also expands the child tax credit. I see which
what the American fairly acts get. A fourth urgently is just about the child text. Read so like I've talked again you about some. Some flaws with the current system are that the current credits, but both of those so that such high tax credit part of the working man? What is actually a fact and american families act? First and foremost, they say if, if you're a family with the child this country you should get the full amount of the tax credit, because this is currently not a refundable tax credit. Its currently partially refundable, sold the tax fell in two thousand: seventeen increase the amount of tax credit for one thousand, two thousand dollars, but only for hundred dollars of that protocol can be your final, ok, but wait. There's more. There is an urgent requirement, so you have to have our names of at least twenty five hundred dollars to get the credit period of, though any family who has less than that right or not,
finding themselves working at an important time they dont get there. I had asked no earnings, no credit, now earnings nickel, a Londoner earnings a little bit of a little bit of credit, because in theirs so it's not only that its partially refundable there's also a phase and based on your earnings of fifteen percent, so it that means is that again we even though a double the tax credit there more than twenty six million children. This country, who are either partially or completely left behind me of them are children of color children living in rural areas. Children of single parents said both the American Family ACT and the working families, tax relief fact start by saying we're going to make them fully refundable, we're going to move their earnings requirement and there's there's no phase, and this is a credit design Tipp to help children can deliver benefits to two children for being a well documented research that that that size,
that I'm giving money to children in particular, young children, could have lasting, though, impacts on on their life outcomes, so that so they do that the working families tax relief act. Also, then I will both of them. I should say, also create an additional boost for young children. I'm children, her under six, the American Families act boost is a little bigger. Aid goes Thirty, six hundred dollars verses, two thousand and four, the order. Kids and their working families tax really backed his round three thousand verses, for. Why do they do that? Are younger kids, more expensive, their expense? Do you have arrogance of you? I have a four year olds, I'm looking forward to this decline and expenses. I feel like I'm looking at some camps- and I don't know I've gotta I've gotta three and seven year old fell. I can number camps are awesome starting summer camp today, still expensive
there's just one of an eye of its very expensive to guessers, there's just a higher cost to taking care of of younger age. So not joking. This is because we have public schools for actual drumming. That's a here. That's a huge part of that mean date. Tom care in this country, like I M, leaving this right now, there's like I'm many crises with my my retards chunk situation in earth. You know it's it's expensive. It is a major share of families and come and elephants younger people who are at their kind of highest arena potentials got and on the floor we're not paint or talk workers. Very much at all. Political little kids need like weird equipment that weird equipment they need,
birds right. They need others. There are also two reasons and anymore. We think, most importantly here is that there is a growing body of research that that says that you know making investments and and young children again. Well, you know not only sort of reduce poverty today, but will have lasting, lasting impact on on their their potential. So this You know it's interesting, because some of this everything can sound you know concerned are to be bought. Refundable, we find of attacks credit at at at at at at a big there's, a real philosophical revolution, including swayed that if you go back to ninety ninety three, ninety in any form welfare reform,
I guess that was later. Ninety five of the Clinton administration and sort of, broadly speaking, the Democratic Party decides in the mid nineties that giving cash assistance to people who aren't working is not politically viable, and so there can be Medicaid benefits without work requirements and and where the universe big fight about that happening now, and there can be cash assistance in the form of yet he see or these weird phase in schedules, but that welfare they decided like didn't work because you had cash assistance to non working, families, Fred and the philosophy of the Bandit child tax credit is to say a that, like substantively it in work to like not help the poorest people and secondarily that, if you create a programme, is the child tax credit if phases out at a certain point. But it's
It isn't a super sharp phase out so not anymore but not anymore. So middle class families benefit from a child tax credit. The idea is that, by making a fully refundable, you will now have a programme that the lowest income families with children benefit from, but that also benefits middle income. Families- and you would say you know like we're all in it together. We're are struggling with the difficulties of having children and here's a programmed hell. So, let's have lots of husband. I mean one is that the child tax fraud, as our is our largest signal expenditure, sort of direct federal financial them directly at and the child get as a third, a third of children are again right, partially are left behind. So that's nonsensical, the taxpayer that he doesn't seventeen tax Bali. It used to be that the child tax credit became unavailable to to marry couple starting at a hundred. Fifty thousand now, let's five hundred thousand dollars so dependent
active when they were a kind of thinking about these changes to the top tax cartel tax credit. They didn't more to help families between a hundred and fifty in five hundred thousand trailers than they do to help the lowest income, families and, again we're not me. I think that the work me there is there is a part of that part of this change. It's going to help non working families, the cash benefits, but, but when you know it I'm talking about when I say partially unavailable public its around forty. If you're married couple with two kids, you know the full time tax credit until you earn upwards of forty, two thousand dollars of words hung low. You always I've been to more moderate. You know that you're not getting the full value of the credit, so low wage workers even are not getting the full exact, leaving only wage workers, even and even when their work in full time exactly- and I think, there's a you know, I think there is a fundamental question to ask about whether or not if this is if this is a policy tool that spending created to help children it it's not about work rate is not about ends.
I see work and the only way to help children is to make it available to all children right. So so would you families actually vat? which combines the adequacy and tax credit proposals and american Family ACT, which is just child tax when those soon are in their similar size and cost. So I gather american family acts charge ex credit enhancement, his misfortune, it it is it's much it's much more generous its. It actually takes that the credit for the older children from two thousand and three thousand dollars and then for the young heads is thirty six hundred dollars at the credits, eyes is bigger. Both of them make some changes to how the current phase out works, but their working families actually fact actually doesn't away that that takes away the tax burden from from some upper income families, so that
Three plans to sort of major tax issues, then, what's going on with these. Otherwise Well, then we hire credit, the new well new and may be revamped credit Sunday. trying to figure out exactly how it is. In fact you can tell it. These plans are written by people who are running for president so they have a new dynamism yeah? Well, so so so, let's talk about those they, so it's the lift up to it. as proposed by Senator Harrison the rise credit proposed by sooner, but our yes, both presidential candidates, the difference between them. I think that the main difference between them is that the lift act is designed to be a supplement to the current aid tc rain. It's it's doesn't change anything about the eighties. He doesn't change anything about the tax. Credit is a brand new credit that you would get on top of that, whereas the rise credit is, moreover, re. Imagining
rethinking of the IPCC, yet they do work really. Similarly for, but I think that is important to note that, even though there are similar cost, the benefits particularly gunfire, particularly for families with children, tend to be a little bigger out under the facts, because you're not you're you're building, on top of the current the current credits, so you're talking I'm early but that Canada, family size issue with the eight he see. One of the main sort of features ease to credits share is that they should have divorce the eighty sea or divorce the credit from from families. I so further the simplest way think about it. The lift act is three thousand dollars per person per worker or hate
you're sing, all three thousand, if you're married couple, six thousand dollars and in the rice, credit is four thousand dollars per per worker, both of them have, if they dont have. The same kind of low gradually phase in as an end, an errand and tax credit there's a hundred percent visa, and so you earn for with the lift act. You get a dollar credit for every dollar of earnings up to three thousand dollars of it. Then you keep that three thousand vigorously You keep that reason. Not three thousand dollars a really long time, and then it starts to phase out I'm at around thirty.
Than dollars between thirty and fifty thousand dollars and then come. So that's a pretty straight like it. So it's a weed subsidy for middle to low income working people exactly the price tag on this. One is much higher than a lot of the others so like why? What? What's the with? What's the? What's, the point of that's like? Who? Who does it help? Well, I mean the price tag. Is the price hike as a lot higher because again, as I have year, taking a single worker, anyone earning between three thousand and thirty thousand, where's is getting a three thousand dollar three thousand dollars. That's a lot of hot air and giving free thousand dollars do and then it's a pretty gradual in a gradual phase out with fair firm for Mary and ass, you go workers without shorter, and it does so little bit more offer, for there is a bit of a boost in their forcing overcome
swift children and then for married couples. It phases out between between sixty and a hundred thousand dollars. So it's it's a prime example What I was saying before about we're giving more money to more people would bring a lot more people into the fold, and people are keeping that sort of MAX credit for a much much longer. A much longer time yet I mean so you knowing in context ready for. If you look at your year, your charred here read. If you look at people who are in the sort of middle twenty percent and the fourth twenty percent- so that's you know solidly middle class two to job or middle class people. That's a hundred and eight billion dollars worth of benefits their rights to that's like bigger in scale than the entire american family, exact. And there's any more generous to the lower income households and that regulate spending
that's my exact, yet they are mean so I'd say I'm not even sure vice chairs earlier, but all these proposals are much much more targeted the bottom sixty percent of households under seventy thousand dollars. Then the taxable into thousands, seventeen you know, but but it is, it is the case that the lift act in their eyes, credit our little bit less targeted and that's only because they did they do reach a little bit higher and and then in our class sitting, part of that is the recognition that there are. You knew it the stairs. If some family- two, maybe aren't unfailing a media, economic and security, but are sort of living on the brink answered. You know I they. I have some appreciation for the fact that, where at least you know we're stopping these proposals at more
A hundred thousand dollars were not trying to pretend that two hundred fifty thousand dollars just middle class in this country anymore. So, but I, but I think again the reason why the reason why they cost more is just that they're they're, going much further up the then comes back term, giving PETE somewhere amounts at the method. Is you know, I've been a bit. People have different thoughts about the the politics of this. Freedom is like one school thought. This is well. If you make a more targeted, you can help the neediest people and the total price tag. A smaller, so that'll be easier than is another that no, if you let the prestige get bigger, you can afford a less targeted programme. Seasons aim more people benefit that makes a politics easier and, as you know, on its efforts is outside the scope of this. I am, I think, the other potential polluters, tell of these is that there is a lot easier to understand a lot easier their stand. I mean you can say with certainty if you're I admire couple in that country earning I'm sick,
thousand dollars. Alas, you're gonna get a six thousand dollars. You're gonna get eight thousand. I'm had right where you it's just it's hard to deal with. The idea of providing these working is getting an extra four thousand dollars examine their pockets. Exactly that's what power and promised here right, but we are actually going to press. Ok, so so rise. Credit replaces yet you say, replaces the eighty three so does that so does rise, have a family size. It tell not to have a family size element out. Well, ok, let me be it doesn't have on the surface, it doesn't have a family size limit. It does have an we included in our analysis of the proposal
I'm not even sure what they're calling it but a bit of a boost to single parents with with two or more kids, because of the way its design and because its replacing the eighty see that there are some what to paint on where you'd be in the current EU aid to see along that sort of female plateau invasion and phase out the current ie. Eight he see could be a little bit of a larger credit for single parents, but your mark heads, and they recognise that date. They don't want to do anything to take away. In fact, they want to make sure that they get a little something extra in there is this sort of child is, can boost belt belt, and that is very much under the themes. It's not it's. That's a lot harder to make that easy, talking point you're, so they're trying to restructure, but also make sure that nobody loses out so there's a complicated right of course, one way to make sure no one was about would also to speed up. Do you even my right? Five thousand six thousand dollars per person by that costs? Tino Costas consideration. I guess I guess
still less than in their tax cuts? The jobs act violet? Seventy five five billion dollars, but yeah yeah That is a good question. Right is what what is it you know? Does it? Does it make sense to sort of limit the fiscal horizons and kind of way I mean Republicans had their own now that there was a kind of weird process in the Senate where there were deciding how much where they cannot add to the deficit before deciding to pretend that I think it right that exactly and they came up with this number one point: five trillion dollars over ten years or something and they and where that and I never really understand it- was like cylindrical Bob Corker. I think that was it about. He won it. Then I think CD. I came back later and told him. How now is actually one point nine trillion when they reach current tell yes, citing this fire. I mean, I think, I'll, look aid,
I think I really sort I've just take objection to the idea that only progressive proposals only proposals that act, but that will actually help the vast majority of of people and families in this country are the ones that have to be have to be paid for right and not seeing that they shouldn't and they're all sorts of ways, there's all sorts of money. We could talk about all sorts of ways that we could raise revenue talks that these proposals, rolling back parts of the more expensive and less targeted parts of the tax cuts and jobs ACT would be. You know a good place, a good place to start, But you know at the end of the day, Republicans that harmonization pass this one point: five one point: nine trillion dollar tax bill that that this deficit financed
I am now in and took the claims that it was going to you now help the economy help workers now that it's not doing that, surprise, surprise or if we now can, I predicted their caught in calling for cuts and investments in the programmes that actually hull blow in water and gum families. So yeah mean could we we could get bigger and better, and that there are all sorts of wonderful idea. Is that that my organization and others have put out to help make our tax when more progressive and and raise more revenue? Hey? Are you hungry, for I had taken her latest favoured Phil, I like doing Johnson, and I personally think he is.
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The cut is applied cash from New York magazine, but it's so much more than that. Its thirty minutes a week where we really wrestle with ourselves we're talking society no expectations, race, sex career ambitions and our bodies. I just spent all time Instagram, looking at health at any size, nutritionist talks and unified? I you know factor on the internet: they just come to me baby, the algorithm we're here conversations. You'd only have with your most trusted friend, so Gabby. What were the most painful memories
I'm jazz, Nike AIR, listen to the cat and spot if I apple or your favorite pied, cast up what helps the Maoists like does, does lift just deliver the most help because it has the highest price tag Ultimately I say so entirely to people who are really in any because there's some of this does from my and the money around two more affluent households. But if we're learned about like of poverty, child poverty are no good good headline stand
yeah. I mean it's a lot about the Blake again very somewhere and kind of overarching goals, kind of move in the same direction, but each kind of tackling different different problems, different tartan. It's hard question to answer only because they d vary so much in size and they all make very different different decisions about how much there gland best. He took something if you took the working families, tax relief act, which is roughly a third of the cost of two thousand seventeen tax bill. You couldn't licked highly targeted that the the largest amount of the benefit is going to that the poorest twenty percent of households in the country. If you took that in scale that up to reach the cost of I mean they're, the same investment as taxes and jobs act or the lift their eyes credit, it would, by fire, be the best proposal.
and get sorted out of combating poverty and deep poverty. I think so it's the most efficient, I think of these Burma, I think, is the most efficient think that's a good way to add. If, if your concern really is child poverty- and I think it's a little bit masks and these numbers, because these are aggregates and you're, not looking that sort of just the families that children, but if you're concerned really is child poverty in particular deep poverty, I think the american Fairly actors are really a superficial way to do it. I also say that you dont. It may be that at some combination of these proposals are ideas from these proposals would work work well together if we are going to divorce the eighty see from from families eyes than I think think doing that in combination with at the minimum fixing those problems at the top tax write, making the tall tax credit actually work,
our children and as an injury which would make a lot of sense. So so that would be were so that would be like you would take Booker's idea rise and then just separately do at least some talent accidently some right, exactly type enhanced the exact ripe to where you families actually back. This was their shared brown propose, retired. brown and I believe, Michael Michael Bent, well that lets you bought it better Yes, it's a worsening. This is the most most efficient like dollars of of work done. They who raises taxes and the richest twenty percent yeah. I just wondered how tax credit, if you feel like the real issue, was a fiscal kids tried like you, you wanted to do something, but it it had to be paid for, or somebody was given your hard time about the deficit like might be that the right way to go.
think, but yeah I mean I dont. These are obvious to me. That really should be the concern. No, so is. It is not obvious. I think that I'm a meal, it certainly looks moderated right. Comparisons, concerns them and other proposals. Since I think that the working families working families has tax relief, exactly the second of the proposals that the Centre Brown is, but he has clearly a champion of working families and children you and in our societies and our country he loves, loves. The eighty see really really believes, and I think really sees it again- is that sort of that quick, acting way to my arm to help those who most need help in a pain for the high and caught high cost of living, but it suits you heap obviously plays and both, I think the working families actually a fact exactly, as you described at super efficient and does sort of it. It addresses the door problem of doing more to help children, particularly those children and poverty and deep poverty, and then helping you know
helping those workers who don't you dont have children, children in the home, I think of the car. You said that you, you could take this idea and complete continued a sort of scale it you know scale it up right. We wouldn't have to limit ourselves that we would just started to be no start here. It would give us the framework to continue to do, Tomorrow, which is actually what I love about all of these proposals, rain they're, taking these existing their working within the existing framework- I mean the rising lived. I guess they're kind of They knew, but there still there still thinking about how to use the tax rate. As as this sort of this this tool and and there you can you can design in different ways, and you can always. You can always scale them off and bring more people into the fold but He had that that mean. That is. That's one reason why I really don't want to say that there is where five and, if I like, better at any other, I feel like having having now come through this conversation right that, if you obstruct away from these five specific bills, would you actually see as a set of different specific?
idea, sweat and one is make the edges he bigger right. One is make the child tax credit fully were fond of all one. is extend yeah Jesse coverage to more people. Right and then mine is changed. The level of the child excrete ride and those are like friend lever, zero, different lemme. Tell you, can push in different kinds of examining to answer have thought about it? Is that lay all kind of like they're turning some dials and some of them are adding new levers has well right, and adding more people both by a sort of expanding up and come later. But you know again, many of these proposals are taken constraints, consideration that that students and those her
I'm staying at home to care for their young children or their older appearance on that. That should be recognised as as work. The lift, Sinner Harris's Lift ACT, which would make the credit available to you to emigrants who you file taxes with it with an. I intend that that's something that does not currently on they are currently not eligible for the eighty c d working I'm and is being workers in this country and thy again, though, the one sat on here that I think are briefly mentioned that near the new lift, plus act, literary lotta will have less from representative to leave, would also sort. I've got the non working, not working port and of four move. This said still universe. All right, it would still have our phase out, but it will remove their earnings requirement altogether, and so I think one last note for fans of sending procedure is that all of these ideas- precise,
because they are a little bit like in the weeds, weird tax, God stuff. This is all like budget reconciliation, friendly kinds of propose. Also, if you want to keep your eyes on possible policy changes that, like might realistically occur in the short term, I think is actually really improve, to pay attention to this kind of stuff? Earlier these? These proposals are sort of designed to be legislated on some something something along these lines could really happen, undoubtedly Eddie work it out you know put in in your reconciliation package in any kind of away we go what's in it, then the house manner this right. This morning again, the representative Nell is considering this part of the extended package. Jew in doing so and prevent about the aid to see in the towel tax credit paid for by hiking the corporate tax rate by a percentage point israeli. So there you go it wooden cover any of these five, but I think it would definitely be enough to
do more by workers without children a home and fixed as like, make the tall tax credit work. Far from its pulling from this same universe, only from this aim universe in so doing so. This is like this. This is where, where action of a lot of action is happening, absent, lazier, ok, so so before it before, I let you go is what but, which it I've asked you what's the I miss, don't think you miss anything. I mean there lots of things. I could talk a lot more about. As someone who author and where my roots iron state policy I probably could ever should have side. There is like momentum for these kinds of ideas and the states to you by people who are interested in this universe. Ideas this could be applied by state. Governments are an end to an extent is already well. Why absolutely I mean well For starters of any guess, he is wearing acted completely or in some partial way, the ones that are short of tied to their current earned income tax credit. Any state within our contacts. Credit could could potentially rectify boast in their own income tax.
But now we have ever I'm Governor Newsome in California, for example- has included a young child boost and ended additional credit for recognising caregiving as work and his The proposal is that of being work through the House and the centre right now. I'm not quite sure how what what the conclusion there will be theirs my proposal and mean that really thinks about how we expand, expand these credits known one. I just realized, I didn't say it all its whole conversation is all Kosovo's, with the eight he see and dive and that the lived in their eyes, credit also bring the aged down also actually goes to God. You know younger adults. So it's not so the way of the way of thinking about the boost for workers with without kids isn't just about the income and eligibility or the credit amount. You have to be twenty five hour. Apparently to get the eighty cease all ray.
your work, even your eighteen or twenty one. In one case, you get the credit as well. It's a proposal we ve been in the state of Maryland, has an earned income tax credit actually last year said we're gonna, make it available to it to eighteen and twenty four year olds, so what's a rationale for that, the twenty five excuse and as the idea that, like they don't want, like a college student with part time, jobs getting I don't really understand the rationale other than that. I think, probably at the time it was created was this sort of the thought policy maker thought. Was that These are all collisions or their people living at home, where there are still you know, still dependence which this is not the reality. Rev of the way things things things: one. Also I mean I mean if you are dependent, you wouldn't get it right right in a technical legal sense ride like if you are like twenty and a full time college student- and you have you- no prosperous parents- paying your bills like Bay, claim you right as a d,
exactly we are allowed to do that that this tax benefits to them for doing that, but then you're there dependent and you can't get exactly example, anyone get them in these other proposals. Do it's really just saying if Europe, but if you're twenty years old and your parents aren't prosperous and you're you're working you're, going to college part time or you're, not even in all right. I'd also like, like people, don't go to the right people and we won't go to college at all right I'll, get your graduated high school working and now good luck for the next him. Exactly and of course, then we only give you two. Five hundred thirty dollars has been as yes, that's another important that I sort of love left. All the conversation is we think about, and then on the other hand, some of the proposals also say will. Why are we stopping this at the age of sixty five, thereby of older adults who are still working Enshiu should get get some benefit, as well. So similar proposals also sort of raised raised that the age limit at the top- and if I was you know as dynamic square
Susie. As you know, I would say that you know if you try to think about. What's the actual sort of like social cost, of these kind of things, that the fact that these many of these proposals, you have the reward, people right, younger people, older people, particularly those income, phase out or people thou custodial children. be in the form, all labour market right I mean that was the original idea that Lithuania, Latvia, and urges that that is the case and building on it. You know, which should should work right, absolutely right that we make we he deputy director of the Institute for Taxation, economic policy. I thanks so much for really great, really excellent conversation. You know here listening to this you'll know that sort of lurking in the background of a lot of this was the question of the budget deficit. I think if you go back a couple weeks, you look at my interview with Carl Smith that monetary policy and the macro economy
that's it- helps you given understanding of alleys. How I'm thinking about that question and why we probably shouldn't worry too much about the budgetary cost of some of these ideas if they deliver help to people who are really need I hope you enjoy and the weeds will return on Tuesday. The cut is applied cast from New York magazine, but it's so much more than that. Its thirty minutes a week where we really wrestle with ourselves we're talking societal expectations, race, sex career ambitions and our bodies. I just spend our time on Instagram looking at health at any size, nutritionist, talks and unified I've? You know factor on the internet. They just come to me baby, the algorithm, we're here,
conversations. You'd only have with your most trusted friend, so Gabby. What were the most painful memories, I'm gonna go listen to the cut on Spotify Apple or your favorite podcast app
Transcript generated on 2021-09-10.