Taxing the rich in a worthy cause
President Barack Obama’s 2015 budget won’t survive the solid wall of Republican opposition in
Congress, but that doesn’t mean it’s a useless document. Virtually every section is an important illustration of how many national goals — in particular, reducing inequality and rebuilding the economy — could be achieved if Congress would end unnecessary and unfair tax breaks for the rich.
One of the most important is an expansion of the earned-income tax credit, which for decades has been one of the biggest and most successful anti-poverty programs, raising 10.1 million people out of poverty in 2012. Currently, it provides few benefits for childless adults who work, and Obama proposed to correct that by increasing the number of people who are eligible for the credit, and doubling the credit to about $1,000.
That would provide a greater incentive to work for 5.8 million people who would be newly eligible for the credit, and would expand the credit for a further 7.7 million people who get it now. It would take a half-million people out of poverty and reduce poverty for 10 million. (It is no substitute, however, for raising the minimum wage, and should not be used as an excuse to lower the Democratic proposal to set the higher wage at $10.10.)
Expanding the tax credit would cost about $60 billion through 2024, and the White House proposed to pay for it by eliminating some high-income tax loopholes.
Meanwhile, Obama’s proposal to help states provide preschool for all 4-year-olds — one of the most important tools for reducing education inequality — would cost $66 billion, and would be financed by raising tobacco taxes.
In all, the president asked for $651 billion in new revenues over a decade, every dollar of which will be resisted by Republicans. That’s because they have failed the test that Obama laid out Tuesday: “As a country, we’ve got to make a decision if we’re going to protect tax breaks for the wealthiest Americans or if we’re going to make smart investments necessary to create jobs and grow our economy, and expand opportunity for every American.”