Friday, November 19, 2004

Turning the Tax Tables to Help the Poor

From an accounting standpoint, there is no difference between a direct transfer to the poor and a refundable tax credit. In political terms, one is called welfare (a sure loser) and the other tax relief (an almost certain winner).

For example, the Democrats should advocate making the child tax credit refundable. While it has been expanded under Mr. Bush to $1,000 a child from $600, the credit does not fully benefit poor families who owe fewer taxes than the full credit amount. Making it refundable changes it into a program that is no different than a negative income tax - what McGovernites were proposing back in 1972, while calling it tax relief. Or, if we do end up with a flat tax, why not play a game of political chicken with Republicans by pushing the "no-tax" income exemption as high as possible?

Why not cut the payroll tax? The Social Security payroll tax is the biggest tax burden faced by poor Americans; cutting it would put more money in their pockets. Such a move would also stimulate hiring, since employers shoulder half the burden of the tax. This plan could be kept revenue-neutral by merely raising the amount of wages subject to the tax - now capped at $87,900.
Good ideas.
The military is now the de facto welfare state. The armed forces and the Department of Veterans Affairs are the two largest health care providers in the United States. The military is also a major bankroller of higher education through the G.I. Bill. And because of America's all-volunteer force, it is the nation's poor that disproportionately serve. By proposing major increases in benefits for the families of active personnel, reservists and veterans, Democrats can use that holiest of holy grails on the right - "our troops" - to help increase opportunities in American society.
Interesting take, but I think it makes sense. I have always found it funny that the right believes that the government can't do anything right, and yet they believe that our military is the best in the world, run very well and they have no problem giving them more money to spend. Instead of fighting them on this, co-opt them. The internet was created by the military. DARPA funds lots of really cool research, why not expand this? Don't have the government fund solar cell technology directly, have DARPA fund it as a way to allow our solidiers to be more mobile.
While Mr. Bush is poised to campaign for an "ownership society," several proposals have been stymied in Congress to provide universal savings accounts. These bills would provide every American, as a matter of birthright, with a trust fund of a few thousand dollars
Great idea. The British do it and they call them Baby bonds. Give every child born in America something like $5,000. The money can't be spent until they turn 18. Forces people to save and to learn how to invest. And it will help to finance their college education.
The United States is a country where - depending on how the question is worded - 90 percent of the population defines itself as middle class (and the top 20 percent of earners think they are among the top 2 percent).
Only in America do we want to be average and above average both at the same time.

via The New York Times

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