Hillary Clinton has settled on a consistent line of attack against her Democratic presidential primary opponents Bernie Sanders and Martin O'Malley. It's the exact same attack that a Republican opponent would use against them — criticizing them for wanting to raise taxes. Clinton, by contrast, promises not to raise taxes on the middle class.
That probably sounds good to a lot of voters. But the concrete (and problematic) implications of this promise became clear with a new Clinton proposal for a carer's tax credit of up to $6,000, supposedly intended to help people defray the costs of caring for the aged or sick. Basically, it would allow people to write off up to $6,000 of money spent on caring, as well as provide some increased Social Security benefits for carers. But because Clinton's proposed tax credit is not refundable, it won't help the people who need it most — the poor. (Indeed, it's actually quite similar to Marco Rubio's tax credit for wealthy families with children.)
To be fair, Clinton is basically copy-pasting this idea from President Obama, who has twice run on similar Norquist-lite pledges not to raise tax rates on anyone making less than $250,000. However, that made a lot more sense in the context of a catastrophic economic collapse, where more deficit spending was an urgent necessity. Economic conditions have improved markedly since 2008 and even 2012 — meaning there's less justification for avoiding taxes as a form of Keynesian policy.
Thus, as Matt Yglesias argues, always restricting any tax increases to the super-wealthy "speaks to a certain amount of intellectual bankruptcy in contemporary American liberalism." Democrats are the party of quality government services, but they're too afraid of Republicans' anti-tax rhetoric to actually expect people to pay for them.
Tax credits are a garbage way to design government programs. The basic problem is threefold: First, a great fraction of the population (who are also the most vulnerable) don't make enough money for federal tax reductions to provide much of any benefit. Second, a standard tax credit will be automatically regressive, because people pay more tax the more money they make, and thus are eligible for a higher sum of non-refundable tax credits. Third, tax credits are horrendously inefficient due to large fractions of the spending going to people who don't need it, and people having to negotiate the hellishly complex tax code to access benefits. Counting tax expenditures, America spends a reasonably high proportion of GDP on social provision — we just get awful value for the money because of lousy policy design.
It would be a somewhat different matter if Clinton was proposing tax credits that were refundable — meaning they would be paid as a transfer to people whose tax liability was already zeroed out, like the Earned Income Tax Credit. But she's not doing that with her carer's tax credit, likely because of the aforementioned fear of Republican rhetoric — any program that included the poor would surely be demagogued endlessly by the GOP presidential nominee. (Ironically, this will often mean that working people who would have qualified for the credit with their wages will slip below the cutoff when they quit to care for a family member.)
So what's a better tax pledge? How about: "I will only raise taxes if we as a society will get a good deal out of it." Take paid leave, for example — over the past year, Clinton has repeatedly mentioned it as a great idea and a key distinguishing characteristic between herself and Republicans. But her tax pledge means she cannot support the FAMILY Act, Sen. Kirsten Gillibrand's (D-N.Y.) proposal for 12 weeks of universal paid leave, financed by a very small increase (0.2 percent, or an average of $72 per year) in the payroll tax.
Millions of Americans would surely be beating down the door to pay for such a policy, because without they it they have to pay through the nose for childcare when they are forced go back to work. For people who are likely to have kids soon, it would be a terrific bargain. For those looking to have kids in the long term, it would be a substantial upgrade in security. (Those who have already had their kids, or don't want them, will have to be content with supporting their fellow citizens in the process of producing the next generation, as they currently do for the elderly.)
Democratic Party professionals assure me that Clinton simply has to go with the no-tax pledge as a matter of political necessity. Perhaps they're right about this. But it also means Clinton can't run on anything but minor assistance for the middle class — and can't promise anything at all for the working class or poor. It's also a fairly cringing stance for a liberal candidate.
Just imagine what America would be like if Clinton's pledge had been a consistent standard in the past: Foundational parts of American economic security, like Medicare and Social Security — financed by substantial, broad-based taxation — could never have passed. Let's at least be thankful that Democrats of ages past weren't so averse to their own politics.