Contrary to the editors of the Washington Post, if I were going to make the federal tax system more egalitarian, I wouldn’t expand the Earned Income Tax Credit to cover 80% of taxpayers:
Understandably, given that hypocritical recent history, Democrats are starting to roll out big, budget-unconstrained policy plans of their own in preparation for the 2020 presidential campaign. Sen. Bernie Sanders (I-Vt.) has his Medicare-for-all proposal, and Sen. Kamala D. Harris (D-Calif.) has her Livable Incomes for Families Today (LIFT) tax plan. Basically, the LIFT plan would provide cash tax credits of $3,000 per year (delivered in monthly installments) to working individuals earning up to $30,000, and $6,000 for married couples earning up to $60,000. Thereafter, it would phase out at different rates depending on household status, such that none with incomes exceeding $100,000 would benefit. If this sounds familiar, it’s because it resembles the existing earned-income tax credit; the main differences are that Ms. Harris’s plan (which would add to, not replace, the EITC) would pay people higher in the income scale, and regardless of the number of children they have.
The net effect of that would be to encourage consumer spending (something not presently needed) and make the federal budget more dependent on the revenue from payroll taxes than it already is. IMO preferred ways of making federal taxes more egalitarian would be either by reducing payroll taxes or increasing FICA max to at least $250,000 from where it presently is at $128,400. How about making 100% of every Congressman’s wages from serving as a Congressman subject to FICA?
Nice, sensible proposals but cash in hand from the party that cares(tm) gets better headlines and is less bothersome to the donor class.
Making taxes fairer isn’t the point. Creating a complex system of qualification for relief, and generating new white-collar accounting jobs, is the Dems idea of a perfect neoliberal policy. It taxes the individual’s time and energy (making them ever so slightly less resistant to manipulation) while subsidizing the party’s core constituency.
I doubt that’s a deliberate strategy. I think it’s more likely to be viewed as the fortuitous outcome of their version of helping people. My own view, as I’ve outlined any number of times, is that the way to help people is to help people not to pay other people to help people.
I think your summary misses one of the aspects of our present system. One of the effects of the Social Security system is to move the risk resulting from three quarters of a century of egregiously bad policy from the working poor and the very well-to-do to savers.