As both Congress and the White House consider reforming US tax policy, experts, academics, and political pundits have been debating how new policy would impact low- and moderate-income workers. Tax policy can affect economic opportunities for this segment of the population, as taxes generate revenue for public goods and services like health care, education, and infrastructure. Three experts on this topic came to the Aspen Institute to weigh in on recent proposals: Alex Brill of the American Enterprise Institute; Mireya Eavey, president of United Way Suncoast; and Frank Clemente, executive director of American for Tax Fairness. The Economic Opportunities Program hosted this panel discussion as part of their Working in America series. It was moderated by Jeanne Sahadi, senior writer at CNN Money.
One source of revenue for government programs like food stamps and unemployment benefits is corporate taxes. On the campaign, Donald Trump repeatedly promised to cut the corporate tax rate from 35 percent to 15 percent. His Democratic opponents considered proposals to increase taxes on corporations. Which of these reforms would positively affect the lives of low- and moderate-income workers? According to the panelists, it depends on who bears the burden of the tax.
While the panelists may not have agreed on a corporate tax rate, they did share a high opinion of the earned income tax credit for low- to moderate-income working individuals and couples. However, they believe that improvements could be made to ensure that those who qualify can take better advantage of the program. They also proposed extending benefits to seniors over the age of 64 who continue to work in order to make ends meet.
Another topic of discussion was the benefits cliff, which could cause a low-wage worker to turn down a higher paying job because of the resulting cut in food stamps, childcare subsidies, and other benefits. The panelists discussed introducing a more gradual process that allows workers to gain skills and advance their careers while earning paychecks that can take care of their families without public assistance.
Tax reform is not a comprehensive solution for low- and moderate-income workers who are looking for pathways toward the American Dream. However, tax policies can dramatically shape these pathways. It is up to our elected officials to decide how best to take care of the most vulnerable US citizens, including those who put them in power.