Kamala Harris Released A Bold Tax Reform Proposal Aimed At Saving You Money
As the latest Democratic response to last year's watershed GOP tax bill, Sen. Kamala Harris has introduced LIFT, a tax plan that she says would bolster the middle class. The legislation, titled the LIFT (Livable Incomes for Families Today) the Middle Class Act, seeks to provide a tax credit up to $6,000 for lower- and middle-income households, as well as represent a massive wealth redistribution effort if enacted.
"Our tax code should reflect our values," Harris said in a Thursday press release, "and instead of more tax breaks for the top 1 percent and corporations, we should be lifting up millions of American families."
LIFT would provide refundable tax credits for people in the lower and middle classes. Households that earn less than $100,000 a year would receive a credit of up to $6,000 a year, while single filers that earn less than $50,000 a year would receive a credit of up to $3,000.
This proposal is bold, at least when compared to the current system. A tax credit directly reduces the amount of taxes you have to pay, dollar for dollar. In other words, if you owe $2,000 in taxes and get a $100 credit, you'd instead pay $1,900. That's more significant than a tax deduction, which is taken away from the income you report so that you're taxed on a smaller amount and can keep more of what you earn. If you get a $100 deduction and you're in the 15 percent tax bracket, for example, you'd pay $15 less in taxes.
Even more significant, though, is the fact that the tax credits would be refundable. A majority of tax credits are nonrefundable, in which case your benefit maxes out once your tax burden sinks to $0. Refundable credits, on the other hand, are provided in total; if you owe $2,000 and get a refundable $6,000 credit, you would be given an additional $4,000. That's some serious wealth redistribution right there.
It's redistribution on the scale of last year's GOP tax plan, you could argue, since the Institute on Taxation and Economic Policy's (ITEP) analysis showed that the two plans cost about the same, according to The Atlantic. The main difference is that the GOP bill is currently shifting money into the hands of the upper class, while Harris says that her plan will shift money to the lower and middle classes. ITEP estimates that half of American workers and two-thirds of American children would benefit from her proposal, according to her press release. No tax credits would be provided for those in the upper tax brackets.
Harris is attempting to address the stark economic inequality that plagues the United States. A 2018 Federal Reserve report found that 40 percent of Americans don't have enough money to cover a $400 emergency expense if one arose. It also found that more than one out of every four adults skipped an essential medical treatment last year because they couldn't afford it. A United Way report from this year found that 43 percent of Americans can't afford all basic living expenses, which were listed as food, housing, health care, transportation, child care, and a cellphone.
"We should put money back into the pockets of American families to address rising costs of childcare, housing, tuition, and other expenses," Harris said in the press release. "Americans are working harder than ever but stagnant wages mean they can't keep up with cost of living increases."