Sen. Kamala Harris (D-Calif.) is running for president, and her signature idea is a big tax cut. She wants a large expansion of the Earned Income Tax Credit (EITC), which would boost the income of lower- and middle-income workers.
It's not the worst idea. But it relies on and perpetuates the traditional American anti-tax phobia. It would be better policy and better politics to simply embrace the need for taxation. Taxes: They are both good and cool.
First, let's examine the policy details. Insofar as it would substantially increase the incomes of working-class and some poor people, Harris' tax credit isn't terrible. As a classic "trapezoid" program — so named because their eligibility schedules make a trapezoid shape — the way it works is by matching labor income up to $3,000 for a single person, or $6,000 for a married couple, and then phasing out the benefit at higher incomes. And indeed, if you are in the sweet spot of making a bit more than the minimum but below the phaseout, you will do quite well.
But Harris' scheme also submits to neoliberal phobia about taxation and universal benefits, which leads to major design flaws. Since the California tax revolt and the rise of Reaganism, moderate Democrats have lived in fear about being baited as a tax-and-spend big government liberal who wants to subsidize lazy welfare queens (blatantly coded as black in conservative agitprop), so much so that by the Clinton presidency they accepted Reagan's premises as their own. Thus policies like the EITC, which are spending programs but allow moderates to claim they are actually tax cuts (despite being identical in accounting terms).
And due to fear (or acceptance) of conservative rhetoric about lazy poor people, Harris' plan (like all trapezoid programs) only matches labor income — if you don't have a job, you get nothing. In reality, most poor people are not able-bodied adults who refuse to work; disabled, children, elderly, students, or unemployed make up a super-majority of the impoverished. Fundamentally, when designing an income policy, leaving out people who need income the most is poor design.
Additionally, trapezoid programs are inherently janky and inefficient. Aside from leaving out the poor, all the qualifications and phase-in-phase-out schedules require a big surveillance bureaucracy to make sure people are claiming their benefits properly. And because filing the paperwork is a huge pain in the neck, and people's incomes go up and down all the time, many simply never claim their benefit at all — which is true of about one-fifth of EITC recipients. (Indeed, I did this by mistake in the one year I was eligible long ago.) And because other tax benefits pay out inversely to need, they are incredibly inefficient in spending terms.
The sensible way of providing the thing Harris says she wants — more income for the bottom and middle of society — is something like a universal child allowance. That includes the poorest people (the income needs of children are a primary reason people fall into poverty), and requires no surveillance bureaucracy or complicated tax forms. Then if we don't like what that does to the income of the rich, we can adjust their tax rate up a bit. It's a better outcome than Trapezoid World — and done cheaper and more efficiently.
But for that to pass, Americans have to get over our tax phobia. Now, one could pay for a child allowance solely by soaking the rich, and indeed keeping a steeply progressive tax structure is important. But to really build a quality society, the middle and working classes will have to pay some more as well.
And we should embrace that! The lie of conservative tax propaganda is portraying taxes as simply a taking from income you would otherwise get to keep. That's only true if one is very, very rich — in reality, for the bottom 99 percent or so, taxes are a great way to fund nice goodies that everyone needs. Without a tax-funded child care, paid leave, sick leave, health insurance, unemployment, and so on, most people either end up paying for that out of pocket, or just going without and suffering (or dying).
Modern Monetary Theory types will argue instead that taxation is only necessary to prevent inflation. But the basic point still holds: Whether one is thinking of taxes as paying for services directly, or only for price stability, the payment must still be made. One can't have a Nordic-style welfare state without Nordic levels of taxation.
This logic seems to be taking root among much of the rest of the Democratic Party, which is talking up New Deal-style tax-and-spend programs, making Harris' proposal seem faintly outdated. (It's fairly similar to something Hillary Clinton proposed in 2016, if substantially larger.) But at bottom, if the United States is to be a decent place to live, we're going to need a lot more taxes. It's time to start facing that fact squarely.