Democrats unveil tax plan that, unlike GOPs, would actually help working families

REBEKAH ENTRALGO at Think Progress

https://thinkprogress.org/democrats-unveil-tax-plan-that-unlike-gops-would-actually-help-working-families-36eb0b1844a5/

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At the center of their plan are two tax measures that would benefit lower and middle income families: expanding the Earned Income Tax Credit (EITC) and the Child Tax Credit.

An expansion of the EITC, a refundable tax credit that primarily benefits lower- to middle-income families, has been embraced at one point or another by both sides of the aisle. House Speaker Paul Ryan (R-WI) and former President Barack Obama both put forth plans that included increasing the EITC. Booker and Baldwin’s plan would allow workers with earnings above 50 percent of the poverty line to receive the maximum EITC. Their proposal suggests a single working mother of two with an income consistent with the poverty level could earn a tax credit increase of more that $2,200 under their plan. Additionally, a working married couple with three children on an income of $20,000 per year would earn a tax credit of of $3,500.

The Baldwin-Booker plan would also expand the EITC to workers without dependent children as a way to boost income for workers and to ensure they aren’t taxed into poverty. More than 20 million workers without dependent children would be affected by a EITC expansion. The duo estimates that a 30-year-old worker without dependents making roughly $12,500 a year currently receives an EITC of about $180.

The GOP tax plan, by contrast, raises the bottom tax rate to 12 percent, cuts the top rate to 35 percent, and also doubles the standard deduction. A recent analysis by the Tax Policy Center found that by 2018, this plan would allow taxpayers in the top 1 percent (which includes incomes of above $730,000), to receive roughly 53 percent of the total tax benefit and their after-tax income would increase an average of 8.5 percent. Meanwhile, taxpayers in the bottom 95 percent would see average after-tax incomes increase between 0.5 and 1.2 percent.

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