Progressive Tax Policy Has Entered the Chat
Now we’re talking progressive tax policy. The tax plan released Thursday by Joe Biden and Kamala Harris contains a bunch of provisions that would reduce child poverty, raise revenue, and increase fairness in the federal tax code.
Biden’s Child Tax Credit proposal would help most families with kids — more than 83 million children would see their family incomes bump up if this was in place now — but the most dramatic boost would go to low-income families. It would cut income inequality and child poverty, especially for the youngest kids (under age six). It would also address racial inequity because a larger share of Black and brown children would be helped. Researchers at Columbia University found that it would lift 4 million kids out of poverty and cut the official poverty rate for Black kids in half and for Hispanic kids by more than 40 percent.
The Biden-Harris plan also would raise the corporate tax rate to 28 percent and put a minimum tax on book income, so no corporation can avoid taxes completely. In 2018, the first year of the Trump-GOP tax law, 91 profitable Fortune 500 companies — including Amazon and Chevron — paid nothing in taxes in 2018. We’d like that list to shrink (or better yet, disappear).
The plan seeks to reverse elements of the 2017 tax changes that supercharge the racial wealth divide.
The proposal would take on elements of the corporate tax code that enrich foreign investors. At least $47 billion of Trump’s corporate tax cuts went to foreign investors in 2018 alone. Biden’s plan would put a real minimum tax on foreign earnings of U.S. multinationals. Foreign investors got a bigger tax break from the Trump tax law than the bottom 60 percent of people combined!
At CTJ, we think there is room to tax the wealthiest individuals more. For income over $400,000, the plan restores a 39.6 percent income tax rate, and it restricts several income tax breaks for the wealthy.
The U.S. should stop taxing earnings from wealth (like capital gains) at a lower rate than earnings from work. Hardly rocket science. The Biden plan does that for those who earn more than a million dollars a year.
We would go further than Biden’s plan to restore tax fairness. But when compared to the inequality increasing tax cuts of 2017, this plan is leaps and bounds ahead. It would provide more revenue to pay for what we need, raised almost entirely from the wealthiest, while taking aim at child poverty.
