WASHINGTON D.C. – In case you missed it, the New York Times reported that an Institute on Taxation and Economic Policy report found that U.S. Senator Sherrod Brown’s (D-OH) Working Families Tax Relief Act would cost significantly less than the Republican Tax Bill that was signed into law last year. Brown’s bill would cut taxes for workers and families by expanding the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), benefitting 4 million Ohioans, including 1.7 million children in the state. According to the New York Times, Brown’s bill would cost less than President Trump’s signature tax cuts but deliver larger benefits to most low- and middle-income Americans. Read more about Brown’s bill here.
The New York Times article can be read here and below.
By Jim Tankersley
May 22, 2019
Tax plans from several Democratic candidates for president would cost less than President Trump’s signature tax cuts but deliver larger benefits to most low- and middle-income Americans, according to a new analysis by the Institute on Taxation and Economic Policy, a liberal think tank in Washington.
The analysis is one of the first to examine the revenue losses and distributional effects of a growing number of tax-cut proposals from 2020 contenders that seek to draw contrasts with the $1.5 trillion package Mr. Trump signed into law in 2017. It finds differences between the Democrats’ plans, in both ambition and design.
The plan by Senator Kamala Harris of California would deliver $271 billion in tax cuts in 2020 if it was in effect, including large benefits for both the very poor and the upper middle class, while a plan from Senator Michael Bennet of Colorado would yield more modest benefits for fewer taxpayers, at a cost of $105 billion for the year.
The sharpest contrast is not between Ms. Harris and Mr. Bennet plans but between the Democratic field and Mr. Trump, whose tax cuts for corporations and individuals will deliver a total of $324 billion in benefits in 2020, the institute found.
The plans from Ms. Harris, Mr. Bennet, Senator Cory Booker of New Jersey and Senator Sherrod Brown of Ohio — who is not running for president but has introduced two major tax cut bills this year — are “each taking generally the opposite approach of the tax cuts of 2017,” said Steve Wamhoff, the institute’s director of federal tax policy.
“There’s nothing in here for investors,” Mr. Wamhoff added. “There’s not anything in here for high-income people.”
The Trump cuts delivered benefits for Americans at every income level, on average, in every state, according to previous work by the institute. But the highest-earning 20 percent of taxpayers received the vast majority of the benefits of the cuts, both in dollar figures and as a percentage of their income, several analyses suggest.
That’s largely because the cuts were centered on a reduction in business tax rates, which administration officials and many conservative economists say is the best way to spur additional economic growth from tax cuts. Administration economists predicted that growth would lift incomes for working Americans, particularly in the middle class.
Several Democratic plans released in recent months, in contrast, seek to help lower- and middle-income workers more directly, by expanding the availability of tax credits.
Mr. Bennet would expand the child tax credit. Mr. Brown has one bill to increase the size of the earned-income tax credit, which would cost $159 billion for one year, and another to expand both that credit and the child tax credit, at a cost of $99 billion. Ms. Harris would also increase the earned-income tax credit, while adding an additional credit on top of it. Mr. Booker would replace the earned-income tax credit with a far more generous credit for workers; his plan would run $251 billion.
All of the credits would be refundable, meaning workers could claim them — and receive checks from the federal government — even if they didn’t have to pay income taxes. As a result, each of the plans would deliver a benefit of at least $1,000 a year to the poorest 20 percent of workers, the Institute on Taxation and Economic Policy found.
Mr. Booker’s and Ms. Harris’s plans would offer the most to that group: an average boost of $2,500 under his proposal and $2,450 under hers, which is about a 17 percent income gain for a typical worker in that group.
Mr. Trump’s tax cuts delivered an average gain of $60 for workers in that group, the study found.
The analysis examined five Democratic plans that focus on tax cuts for the middle class. It does not include some candidate plans designed to raise revenue through taxes on the wealthy, such as Senator Elizabeth Warren’s proposed wealth tax, though the institute plans more analyses as the presidential race progresses.
The proposals from Ms. Harris and Mr. Booker, and one of Mr. Brown’s plans, would deliver larger benefits for taxpayers in the middle of the income distribution than Mr. Trump’s cuts did, the analysis found. The less expensive of Mr. Brown’s plans would deliver smaller benefits, as would Mr. Bennet’s, though both plans would give a larger share of their overall windfalls to the middle class than Mr. Trump’s did.
Ms. Harris has said she would repeal the Trump tax cuts. A spokesman for her campaign, Ian Sams, said Tuesday that the new analysis confirmed that her plan was “a complete 180 from Trump’s disastrous tax bill — it helps working families make ends meet each month and lifts up those living in poverty, not the very rich and big corporations.”
Mr. Bennet’s plan would benefit only low- and middle-income families with children. Other plans would benefit workers with or without children. Ms. Harris’s plan would give the largest benefits to married workers with children. Mr. Booker’s plan would give its largest benefits to married workers without children.
All of the plans would deliver an outsize portion of their benefits, as a share of all taxpayers, to black and Latino families, because those workers disproportionately fall in the bottom 60 percent of taxpayers by income. Mr. Trump’s tax cuts, by favoring higher-income taxpayers, delivered an outsize share of their benefits to white and Asian taxpayers.