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Just in time for Tax Day, we have new insight into the dueling partisan visions for the U.S. tax system.

We already knew that the GOP’s 2017 tax law mostly benefited corporations and the wealthy; that’s old news.

Catherine Rampell mug

Catherine Rampell

But on Thursday, we got some illustrative examples, courtesy of the Institute on Taxation and Economic Policy. The organization found that at least 60 profitable Fortune 500 firms paid no federal income tax in 2018, about twice as many as in the years leading up to the law’s passage.

In fact, most of these companies got a federal tax rebate.

For context, Americans’ top complaint about the tax system remains the “feeling that some corporations don’t pay their fair share,” according to a March poll from the Pew Research Center. Now let’s consider what Democrats have on tap.

A lot of competing plans have piled up. Many 2020 presidential contenders have released proposals, covering everything from forcing big companies to report the same income to the tax man that they report to their shareholders (Elizabeth Warren); to using higher estate and inheritance taxes to pay for government-funded “baby bonds” savings accounts (Cory Booker); to something just shy of universal basic income administered through the tax code (Kamala D. Harris). Some of these ideas are better thought through — legally, fiscally, politically — than others. But the general theme is this: Forget (or reverse) those tax cuts for the rich. Focus on cutting taxes for low- and middle-income families instead.

Last week, we saw Democratic senators coalesce around a specific iteration of that theme. In new legislation, they offered the clearest blueprint yet for what they would do if they regained unified control of government.

It’s called the Working Families Tax Relief Act. Already, nearly every Democratic senator has signed up to co-sponsor it — including every senator now running for president.

The bill, introduced by Democratic Sens. Sherrod Brown (Ohio), Michael F. Bennet (Colo.), Richard J. Durbin (Ill.) and Ron Wyden (Ore.), focuses on expanding the earned-income tax credit (EITC) and the child tax credit.

For those unfamiliar, the EITC is a tax credit that incentivizes work by topping off workers’ wages.

Given the EITC’s record of lifting living standards and job growth, it has long enjoyed bipartisan appeal; Republican and Democratic presidents alike have presided over successive expansions. If passed, this new bill would boost the credit for families who have children and massively expand it for “childless” adults (which includes non-custodial parents), who are currently eligible for little support.

What about the child tax credit?

The new bill would make the existing child tax credit available to all children by making it fully “refundable.” That is, poor families whose income taxes are less than the credit could receive the entire balance as a refund.

It would also create an entirely new, fully refundable “Young Child Tax Credit” available to families with children under 6. Together, these changes would increase the child-tax credit’s maximum value to $3,000 per preschool-age child. That would surely be a welcome increase in living standards for families struggling with child care and other expenses.

The bill’s beneficiaries would be widespread — raising incomes for households containing an estimated 114 million people and putting a significant dent in the child-poverty rate, according to an analysis from the Center on Budget and Policy Priorities. No cost estimate is available yet, but it appears less expensive than other ambitious proposals Democrats have put forward.

It also has the virtue of building on ideas that have traditionally had bipartisan support without undermining that support, as some other rival Democratic proposals risk doing.

An alternative plan that Brown introduced, for instance, would expand eligibility for the EITC to include those performing non-market work, such as full-time caregivers.

I wholeheartedly agree that caregiving is hard work worthy of government support. But opening up something called an “earned income” credit to people without dollar earnings virtually guarantees Republican opposition. Which in the long run might jeopardize a successful program now seen as apolitical.

There are other tools available to help hard-working populations not eligible for the EITC — including of course expanding the child tax credit. The politics of the child tax credit are very different from those of the EITC, because it’s not defended on the grounds of moving people into paid jobs; it’s about supporting parents and children.

All told, for all the criticism of Democrats as a politically tone-deaf party devoid of any message other than “Not Trump,” they’ve worked hard to craft an economically efficient, politically formidable plan.

Family-values-and-job-growth-supporting Republicans should take note.

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Washington Post columnist Catherine Rampell can be reached at crampell@washpost.com.

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(19) comments

Rick Czeczok

But how do they pay for free collage for all, free health care for all, and the influx of people from Mexico (most all on welfare already). Yea they have it all figured out alright.

oldhomey

I agree, Ricky. If people want to have a collage, they should make it themselves. Asking the government to provide them one is just too much. Or, as you and A Veteran (of no known military organization might put it: " . . . too much to ask!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"

new2Lax

I didn’t see any where in this column where they wage increases of 3.2% was going to 25% more to the lower income folks rather than higher income folks. As far as the 2017 tax reduction, to me taxes should be reduced according to the % paid, that only seems fair. Wage increases from growth going to the lower level employee indicates Capitalism works and you are rewarded for your work. This growth also accounts for the need for jobs and good jobs, the one thing that kills the wage increase is in the lower levels is immigrants working for less holding, killing the lower level worker. Supply and demand does play a role in wage increases, there is no doubt.

Cassandra2

"...Wage increases from growth going to the lower level employee ..." Yeah, Newt, keep up that trickle-down fantasy!

A Veteran

cassy---According to the NYT the lower 15% of workers have gotten between 6 and 7 % raise in wages since the Trump tax plan into effect .That paper also stated that liberals have done a good job of lying to the people,do some research before you make a fool of yourself by trying to lie to people.According to the NYT over 65% of taxpayers averaged to pay between 1200 and 1500 less in taxes plus those same taxpayers have seen their wages increase an average of 6%.It appears you are just blowing hot air with no facts!!!!!!!!!!

new2Lax

Did wages increase 3.2% or not.

oldhomey

More penetrating analysis by our silver-tongued guide to making America return to the 19th Century, new2.

new2Lax

If where we are is an example of what to expect going forward, bring on the 19th century. I’m not sure those on the left or Democrats were much more on an honorable group or not, I suspect so.

oldhomey

new2, you have spoken like a true, over-bearing, huffing and puffing reactionary. And the second sentence of your 9:14am post is pure new2, which is to say totally indecipherable.

A Veteran

Just more liberal LOON B.S.!!!!!!!!!!!!!!!!!!!!!!!

Cassandra2

Apparently the "veteran" still believes in trickle-down, despite decades of experience proving that it doesn't work.

DMoney

Doesn't work? Trickle down is capitalism. It was just named by Reagan. Show me a more successful form of economics in the history of the world.

oldhomey

You lost the bet that you agreed to, D. Get off these boards for the next seven days.

A Veteran

cassy the fool--Talk to people who are dong the hiring they will tell you they are paying more for new hires and giving their current employees raises to keep them.What does a fool like you call that!!!!!!!

DMoney

I for one am struggling to afford new hires. $14/hr won't land an entry level office part time position. Bad for us, good for country

capedcrusader

DMoney - What positions are you hiring for?

oldhomey

D, get off these boards and stay off them for a week. You lost the bet. And, by the way, do you tell people when you hire them that you would not want to spend ten minutes with them outside work? They might not want to work for you even at $20 an hour. Or, on the other hand, they might want to work for you simply as a means of avoiding to have to socialize with you.

new2Lax

No, I think your thinking of Socialism, that don’t work. Ask Pelosi, She stated clearly yesterday, Socialism is not where the majority of Democrats want to go. One must wonder why when Bernie Sanders is running second in the polls. Is the party split on direction.

capedcrusader

Bernie isn't a Democrat.

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