Democratic lawmakers and presidential candidates are offering a slew of proposals to expand tax credits benefiting workers and families, as a way to counter President Trump’s 2017 tax-cut law.
Trump is expected to tout his tax law, known as the Tax Cuts and Jobs Act, as he runs for reelection, but the tax law has never been popular. Democrats are highlighting that their tax-credit proposals primarily benefit low- and middle-class people and are arguing that their proposals can help address the rising cost of living.
“It is an answer to what they did with the Tax Cut[s] and Jobs Act,” House Ways and Means Committee Chairman Richard Neal (D-Mass.) told reporters Thursday, not long after his committee approved a bill expanding tax credits. “When you consider how little the people at the bottom got, what we’re saying here is, ‘Look, this is a chance to come to the aid of people who go to work every day.’”{mosads}
Trump’s tax law, which no Democrats voted for, cut taxes for people in all income groups on average. But polls have indicated that many people don’t think they received a tax cut and view the law as benefiting wealthy people and corporations more than the middle class.
In response to the GOP tax law and concerns that many people do not have enough money to cover emergency expenses, Democrats have offered a host of proposals designed to put more money in people’s pockets. Their proposals focus on expanding two tax credit programs: the earned income tax credit (EITC), which benefits low- and middle-income workers, and the child tax credit (CTC), which benefits families with children. People in some cases can get their benefits from the credits in the form of a tax refund.
The bill the Ways and Means Committee approved makes targeted expansions to the EITC and CTC, as well as to the child and dependent care tax credit, for two years. The changes include expanding the EITC for childless workers, making the child tax credit fully refundable and increasing the CTC amount for young children.
Across the Capitol, nearly every Senate Democrat has co-sponsored a bill, offered by Sens. Michael Bennet (D-Colo.) and Sherrod Brown (D-Ohio) in April, to expand the EITC and CTC. It would make similar changes to the two credits as the Ways and Means Committee-approved bill, but the changes would be permanent and people would also be able to get an advance on their credit payments.
“We need to make investments that lift up incomes for all Americans so that they can earn enough to afford a middle-class life,” Bennet, who is running for president, said in a statement to The Hill.
Another bill from Bennet, Brown and Rep. Rosa DeLauro (D-Conn.) that would expand the CTC further has the backing of more than 30 Democratic senators and more than 180 Democratic House members.
Brown and Rep. Ro Khanna (D-Calif.) also have a bill to provide an even bigger expansion of the EITC, which counts Democratic presidential candidate Rep. Tim Ryan (D-Ohio) as a cosponsor.
“This is the Democratic answer to supply-side economics,” Khanna told The Hill.
Bennet is one of several Democratic presidential candidates who have highlighted proposals to expand tax credits for low- and middle-class people, or to create new ones, as part of their campaigns.
Sen. Kamala Harris (D-Calif.) last fall proposed a new refundable tax credit of up to $6,000, or $500 per month, which would be in addition to existing tax credits.
“Trump gave corporations trillions of dollars in tax cuts and tried to sell it to the American people as a tax cut for the middle class. Senator Harris’ LIFT Act gives that money to the people who need it – middle class American families – not corporations, not the 1%,” Harris spokeswoman Kate Waters said in a statement to The Hill.
Sen. Cory Booker (D-N.J.) in April proposed an expansion of the EITC he calls the “Rise Credit,” which includes nearly doubling the income maximum at which people can receive the EITC and allowing low-income students and family caregivers to receive the credit.
“If you’re at home and you’re taking care of a spouse with Alzheimer’s or a kid with special needs, that too is work and you’re going to qualify for my credit,” he said earlier this month at the Black Economic Alliance presidential forum.
Sen. Amy Klobuchar (D-Minn.) recently announced that in her first 100 days as president, she would outline a plan to cut childhood poverty in part by expanding the EITC and the CTC.
Adam Ruben — director of Economic Security Project Action, which is focused on significantly expanding EITC — said that states have also been passing legislation to expand the credit, and that he expects to see more proposals on this issue from Democratic lawmakers and presidential candidates.
“I think we’re going to see in the coming weeks more of the campaigns offering their own plans to put money back in working and middle class people’s pockets,” he said.
Democratic strategists and left-leaning policy experts say that the proposals are a smart way to respond to Trump’s tax law and are complementary to Democratic proposals to raise taxes on the rich.
The left-leaning Institute on Taxation and Economic Policy (ITEP) released a report last month finding that the bulk of the benefits for many of Democrats’ tax-credit proposals would go to those in the bottom 60 percent of income, and that very little of the benefits would go to those in the top 20 percent of income. On the other hand, the group estimates that the majority of the benefits of the GOP tax law will go to those in the top 20 percent of income.
“It’s almost like the opposite of the Tax Cuts and Jobs Act,” said Steve Wamhoff, director of federal tax policy at ITEP.
Democratic pollster Celinda Lake said that with the tax-credit proposals, Democrats are “taking advantage of a huge opportunity.” She said that Democrats are historically competitive with Republicans on the issue of taxes because Republicans have become associated with tax breaks for the rich and because support for the GOP tax law is low.
She also said that hitting Trump on taxes could be important because Democrats need to offer a contrast to the president on the economy, where Trump’s approval rating is higher than on other issues.
“Democrats need to start building an advantage of the economy and tie him on the economy,” she said.
The EITC and the CTC historically have had bipartisan support. Expanding the EITC for childless workers is an idea that had been backed by former House Speaker Paul Ryan (R-Wis.). And an expansion of the CTC was included in the GOP tax law.
But Republicans opposed the bill that the Ways and Means Committee approved, criticizing the fact that the tax-credit expansions were not offset and arguing that the EITC has been abused. They also said that the first priority should be to make permanent the CTC expansion in the GOP tax law, which currently expires after 2025.
Ways and Means Committee ranking member Kevin Brady (R-Texas) said the bill “is seriously well-intentioned, but it misses its mark.”
Neal said the bill would be paid for when the bill comes to the House floor, and Democrats said there are already penalties for incorrectly filing the EITC.
Both sides are ready to take their fight to the election.
Trump campaign communications director Tim Murtaugh touted the president’s tax law and the economy, saying that most taxpayers have seen bigger paychecks under the law and that wages are rising at their fastest pace in a decade.
“The President’s policies are fueling the booming economy and creating jobs,” Murtaugh said. “Make no mistake about this: the only thing Democrats know about taxes is that they’ll raise them.”