Director of Federal Fiscal Policy
Republican policymakers claim that the damaging changes they’re proposing to SNAP (formerly food stamps), housing assistance, and Medicaid will promote work. For example, the House Agriculture Committee farm bill would enact unworkable, expanded work requirements that would take benefits away from people who don’t meet them, despite the evidence that such requirements do little to improve employment. Meanwhile, the major tax law enacted last year, which reallocates trillions of dollars, gave Republican policymakers a golden opportunity to truly encourage and reward work — but they didn’t take it:
No Earned Income Tax Credit (EITC) improvements. The EITC is one of the most powerful federal policy tools for boosting work and employment, research shows. A growing body of research also finds that children in families receiving the EITC’s income boosts are healthier, do better in school, and earn more as adults. House Speaker Paul Ryan has long called for expanding the inadequate EITC for low-paid childless adults and non-custodial adults, who are the lone group that the federal tax code taxes into (or deeper into) poverty. He reiterated this month that a more adequate EITC for these workers “helps pull them into the workforce by making work pay.”
But Republican lawmakers never proposed any such EITC expansion in drafting the new tax law, even though an EITC improvement that Ryan favors and President Obama proposed would have cost less than the law’s large tax cut for heirs of the wealthiest estates, described below. (The Ryan-Obama proposal would cost about $70 billion over ten years, compared to about $80 billion for the new estate tax cut.)
Finally, who will end up paying for the law’s tax cuts, which are skewed to the wealthy and corporations and will add $1.9 trillion to deficits over ten years? If the Republican proposals for deep program cuts become law, most households will be net losers from the law — they’ll lose more from the program cuts to pay for the tax cuts than they’ll gain from the tax cuts themselves. Only the highest-income households will be better off.
Policymakers should restructure the tax law and reallocate its massive tax cuts for wealthy people to address pressing national needs, including doing more to encourage and reward hard work.