How Both Public Tax Reform and Private Sector Initiatives Can Strengthen Charities

This post originally appeared in TaxVox.

In the March and April 2017 print editions of the Chronicle of Philanthropy, I proposed both a public and a private sector initiative for strengthening charities. These included improved tax policies as well as steps charities could take independently of any legislation. These initiatives aim to increase charitable giving of income, wealth, and time.

My organizing principle was simple: First, make tax subsidies more effective and efficient. Second, improve the way charities market themselves. Neither Congress nor the charitable sector has ever approached either task in a comprehensive way. The articles are here and here, with permission of the Chronicle.

Here, briefly, are my suggestions:

What government can do:

  • Allow all taxpayers—even current non-itemizers—to claim a deduction for contributions above some minimum amount.
  • Extend the deduction to gifts made by April 15 or filing of one’s tax return—similar to the extended contribution date for Individual Retirement Account contributions– rather than December 31 of the previous calendar year.
  • Create a better donation-reporting system to IRS to reduce tax non-compliance, with a reward of an extra deduction for those donations; the improved tax compliance should more than pay for the extra reward.
  • Make it easier for individuals to make donations from their IRA accounts.
  • Reduce and simplify the excise tax on foundations.
  • Encourage charitable bequests, especially if the estate tax is cut or repealed.

What charities can do, independently from government:

  • Create a national campaign to promote giving, such as:
    • Tell simple but powerful human-interest stories extolling generous people.
    • Help donors identify worthy programs by promoting access to useful sources of information on each charity.
    • Encourage people to give to charity when they settle disputes.
  • Help people understand better their potential to give out of wealth, not just income, and to leave lasting legacies:
    • Run endowment campaigns.
    • Encourage wealth advisers to promote charitable giving.

Today charities feel under siege. They fear they are about to lose direct government support if Congress cuts domestic spending that funds the specific programs they run. And they worry that lawmakers will trim tax benefits for charitable giving by individuals and firms. Their concerns are legitimate but, in truth, over the many decades I have worked with charities on public policy issues, their advocacy has nearly always felt defensive.

Charities can easily become collateral damage from policies that are not aimed directly at them. Congress won’t decide broad issues such as size of government, tax rates, limits on tax incentives, or the share of revenues that should come from income taxes (the only tax where there is a charitable deduction) solely or primarily based on their effect on the charitable sector.

Thus charities must think longer-term as the nation is struggles to define a modern set of public policies and societal goals relevant to 21st century needs and opportunities. My suggestions are intended to extend well beyond any current political battle, no matter which party controls government at any point. Their goal is to strengthen the charitable sector, by improving both government incentives and the outreach and self-examination by non-profits themselves.

Fighting to maintain the status quo is not a strategic option. Nor should every charity expect to come out unscathed in this rapidly changing environment. But the US is facing important choices as it decides the direction and size of government in the Trump era. That debate ought to include a broad look at charities in this new environment and whether that includes strengthening, though reforming, the role of charities in American life.


How the Fight over Symbols Prevents Health, Trade, Immigration and Tax Reform

This post originally appeared on TaxVox. 

President Trump came into office promising to repeal the Affordable Care Act, abandon key multinational trade agreements, build a wall and send immigrants home, and reform the tax code. Many Democrats have sworn to oppose him at every turn. On the first three items, he has already faced obstacles or stalemate and even temporarily left the battleground. But are these debates really about substantive reform that improves people’s lives? Or mainly over capturing symbols that appeal to each party’s base? Those goals aren’t the same.

Reform defies easy party or ideological labels because it often focuses not on bigger or smaller government but fixing poorly-functioning operations, establishing greater equity among households, or adapting to new circumstances. With health, immigration, trade, and tax policy the need for constant real improvement conflicts with important, but often-counterproductive, fights over political symbolism.

Health Reform. When the Affordable Care Act (ACA or Obamacare) passed the Senate, backers knew it had flaws. They hoped to fix them later in the legislative process, but the death of Sen. Ted Kennedy cost Democrats their filibuster-proof majority in the Senate and made the fixes or amendments requiring a new Senate vote virtually impossible. As a result, the healthcare community and households continue to grapple with an imperfect environment: Gains from expanded insurance coverage have been offset by slower than expected take-up rates, especially among young adults, for ACA marketplace policies, ongoing uncertainty about Medicaid expansions, and failure to come to grips with the full impact of health cost growth, often outside of Obamacare, on the federal budget.

Congress and President Trump have a chance to repair those problems, but both parties find themselves in a box. Republicans can’t accept any reforms that allow Democrats to claim “Obamacare” is being preserved, while many Democrats can’t swallow changes that acknowledge the ACA’s failures.

Trade Reform. Trade is another case where political symbolism impedes needed change. No doubt, our trading partners at times violate the spirit and even treaty letter of “fair” trade (so does the US), but trade agreements are the very vehicle for limiting such violations. Rather than repairing these understandings, political symbolism demands they be torn up or abandoned. Thus, instead of reviving and revising the Transpacific Partnership, which might have enhanced US trade in Asia, the Trump Administration has scrapped it.

Any successful trade agreement must strengthen rather than weaken international commerce if it is to promote economic growth without raising consumer prices. But trade debates occur on treacherous political ground. Any shift in trade, no matter how good or bad, almost inevitably reduces demand for some US-made products and hurts the workers producing those goods, thereby creating a new group of populists who will cry “foul” that the President and Congress have once again abandoned workers.

Immigration Reform. People suffering from persecution, hunger, or lack of human rights will try to escape those horrors and find new opportunity. So it has always been and will always be. Borders are porous enough that there are tens of millions of immigrants, legal and illegal, in the United States and much of Europe. Meanwhile, immigrants grow as a share of developed nations’ total populations, partly due to relatively low-birthrates in the existing populations. We can reduce opportunities for legal entry, step up border patrols, build walls, and send even more people back to their prior country of residence. But none of those actions really address the basic economic and social forces at play, while temporary symbolic political victories leave millions of families fearful of breakup, reduce domestic output by immigrant workers, and hurt America’s image as the home of freedom for people around the globe.

Tax Reform. In taxation, the symbolic fights almost always center on the size of government and progressivity. Yet many of the tax code’s real problems are that it is inefficient, complex, and treats those with equal incomes unequally and inequitably. The Tax Reform Act of 1986 neatly focused on the latter issues by making no significant change in either revenues or progressivity. But even in its early stages, the debate over a 2017 tax reform has already been muddled by a cacophony of mutually inconsistent goals: Reduce tax rates for multinational corporations and cut taxes for the middle class while not increasing the deficit or raising anyone’s taxes.

As long as lawmakers fight mainly over symbols rather than substance, they are unlikely to achieve many real improvements in policy. And tax reform will follow along the path down which health, immigration, and trade reform already seem headed.


The ‘Save Our Social Security Act of 2016’: A Major Step Toward Reform

Without fanfare, a bipartisan group of Representatives has introduced a bill that could bring Social Security’s finances close to long-term balance. Labeled the “Save Our Social Security Act of 2016,” the proposal also recognizes an important fact: that the longer we delay reform, the more it will cost post-babyboom generations.

Gen X and Y and Millennials are already scheduled to pay more for their benefits than boomers and older generations no matter what path we take to reform. Whether we raise payroll taxes, use more income taxes to pay off Social Security obligations, or cut benefits, someone must pay. Delaying reform only increases the burden on the young.

The “SOS Act,” as it is called, was introduced by five Republicans and one Democratic member of the House. Co-sponsors Reid Ribble (R–WI) and Dan Benishek (R–MI) were joined by Jim Cooper (D–TN), Cynthia Lummis (R–WY), Scott Rigell (R–VA), and Todd Rokita (R–IN). They pieced together the proposal using an interactive tool  offered by the Committee for a Responsible Federal Budget. (Disclosure: I serve on the committee’s board of directors).

The bill contains these primary features (listed in order of their ability to shrink Social Security deficits; the last two would raise deficits):

  • Increase the “normal retirement age” (NRA) by two months per year until it reaches 69 for those turning 62 in 2034. Thereafter, it indexes the NRA to increases in longevity, so that the fraction of a lifetime spent in retirement stops growing.
  • Levy the OASDI tax on 90% of covered earnings.
  • Use a more accurate measure of inflation to determine Social Security’s cost-of-living adjustment (COLA), so that benefits fall by about one-third of one percent per year.
  • When calculating average Social Security earnings, count a few more years than the 35 top-earning years, thereby creating a more accurate (and usually lower) measure of the share of a worker’s average lifetime earnings that will be replaced under the Social Security benefit formula.
  • Under Social Security’s current design, the first dollars of average lifetime earnings are replaced at a 90% rate, the next dollars at a 32% rate, and the last dollars at a 15% rate; under the new proposal, the 15% rate would drop to 5% for those in that top earnings bracket.
  • Raise annual benefits by roughly $1,000 a year for those with more than 20 years of coverage, and let that amount grow at the average wage growth rate.
  • Set a special minimum benefit so that, for instance, workers with 20 years of coverage would receive a benefit no lower than the poverty level, and increase the minimum benefit by the average wage growth rate instead of the inflation rate.

These changes would bring the Social Security system close to long-term solvency. Enough taxes would accrue to pay full benefits not only for 75 years, but also to roughly cover benefits in the 75th and later years. By contrast, the last major reform (in 1983) didn’t close the long-term gap.

Almost as soon as that Reagan-era bill was passed and signed, its failure to cover the period after 75 years led Social Security actuaries to declare the system’s finances out of balance. The solvency issue would pop up again under subsequent presidents. The SOS Act, however, would restore balance, and do so equitably: by closing one-third of the funding gap through tax increases, one-third through progressive rate changes, and one-third through adjustments in the retirement age.

The bill can still be improved. It could do more, at a fairly moderate cost, to help those with below-median lifetime incomes. (As a member of the bipartisan 1999 National Commission on Retirement Policy, I was among the first to propose higher minimum benefits as a way to address distributional issues and improve benefits for low and moderate-income elderly.) The bill could also address the structure of survivor and spousal benefits, which is built on the notion of a stereotypical mid-20th century household with a male breadwinner and a stay-at-home wife. It could also address the negative economic consequences of keeping the early retirement age at 62 no matter how long people live.

For those who are interested, Social Security’s assessment of the bill’s consequences is helpful to read but it can also be misleading. The assessment implies that future retirees’ income replacement rates will fall relative to those of current retirees. That’s true only if Americans keep retiring as early as they currently do. In fact, many people (except those with the highest incomes) could enjoy an increase in replacement rates simply by working an additional year for every year the average life expectancy improves.

A version of this post originally appeared on the Retirement Income Journal.


Thanks, Boston, for Restoring My Faith

Like many others, I have found it difficult to maintain a sense of optimism this campaign season. I’m less anxious about the candidates, whatever their limitations, than about how much we, the public, seem to tolerate—even at times support—campaigns whose modus operandi focuses on attacking others, whether other candidates, parties, or populations other than our own. I always worry when any of us (including myself) seeks an enemy on which to re-anchor a threatened political or religious belief or simply project discontent. At a minimum, this way of tackling our problems retards progress by failing to focus on what we can do together. More dangerously, it portends either disintegration or authoritarianism when it arises in decent times or periods of limited growth, thereby gaining potential to explode in times of true distress. If you want evidence, just look at the retreat from democracy in some developed nations throughout the 20th century or today in Turkey, Hungary, and, potentially, Austria and parts of Western Europe.

A day at the Boston marathon more than took away my gloom. I went there to cheer on my stepdaughter and a friend with whom I have worked at an Alexandria community foundation. It wasn’t just their fortitude and courage, as well as the efforts of thousands of other runners, that inspired me. My faith in humanity was restored by the extraordinary support of the public. There they were by the hundreds of thousands, from one end of the course to the other, cheering on everyone who passed by.

There were no class divisions for whom the bystanders cheered; everyone was a hero for trying. The runners ranged from the world’s best to those who barely had the stamina and body parts to survive—or maybe that’s my own projection of what I would look like out there. When the mobility impaired ran by, the cheers got even louder. No one was a stranger. Each public cheerleader only competed to see who could be loudest and support the most runners. Local bands found a street corner on which to play. Businesses gave out ice cream and other free goodies. Conversations flourished among absolute strangers. One of my companions broke into tears witnessing the community response.

Survivors of the 2013 terrorist attack also ran, making clear that fear—the only thing that can make terrorism succeed—would not deter them. Ken Ballen, the brilliant president of Terror Free Tomorrow, has long stressed that terrorists need a community to thrive or even survive. Such communities can form around, or in response to, blaming or distrusting others; they disconnect from the people and communities around them that don’t share their views. They are the exact opposite of what I observed of Boston that day. Thus, despite the very real pain in Boston, as well as San Bernardino, Fort Hood, Charleston, and other parts of the country attacked by individual terrorists or fanatics, our nation still thrives because of the strength and resilience of our communities.

So thank you, Boston. Your actions do more than inspire me. They drive me to undertake actions that include, unite, and ultimately strengthen the communities in which I work, play, and live. Whatever happens in the remaining campaign season, I can only pray that our leaders, whether newly elected or reelected, will learn from and follow your lead.


What the Success of Trump and Clinton Portends for Future Elections

Despite their divergent policy views, Hillary Clinton and Donald Trump have many similarities that help explain their success in this election season. Pay attention: these lessons will be taken up, for better or worse, by future candidates seeking office in an unreformed system and by those in Congress, the states, or the political parties seeking reform after viewing with disdain the 2016 primary election process. With one exception, I list these common attributes in what I consider their rough order of importance to this and future campaigns: initial fame, use of identity politics through appeal to an excluded group, wealth, Ivy League pedigree, New York connections, presidential campaign experience, a sense of entitlement, and birth year.

  1. Fame. From the beginning, Donald Trump and Hillary Clinton were the most famous candidates in their respective parties, even before the media facilitated Trump’s further rise by granting him an extraordinary share of the attention. Correspondingly, the weakest candidates also tended to be the least famous. Initial fame has usually been quite important to both parties, though a bit less so on the Democratic side, where the Jimmy Carters and Barack Obamas have been able to build upon their appeals as outsiders. More unusually this time around, it didn’t seem to matter much where the fame came from, thus following the saw of our increasingly media-crazed world that bad publicity is better than none at all.
  2. Identity politics and appeal to an excluded group. Clinton and Trump—along with Cruz and Sanders—built their campaigns on a base of vocal supporters who felt underrepresented and denied a fair voice in government: liberal older women, men without college degrees or with declining job prospects, evangelicals, and the young. Yes, each of these groups is diverse, but each provided a surge in voters for the primaries as well as enthusiastic volunteers for the campaign trudge. The same might be said eight years ago about President Obama’s appeal to liberals of all colors who felt that his election would help complete a civil rights revolution. This pattern amends the traditional notion that the excluded group to whom one must appeal is the far left or far right of each party, or as Richard Nixon told Bob Dole, “You have to run as far as you can to the right because that’s where 40 percent of the people who decide the nomination are. And to get elected you have to run as fast as you can back to the middle.” With declining party identity, by the time of the general election the majority of the public now identifies with neither party nor that excluded group successful in the primaries. Themselves now largely excluded unless new coalitions can be formed, they will decide the final election by whom they vote against rather than for.
  3. Wealth. The Clintons are worth at least $50 million and perhaps more than $100 million. While Trump has been accused of exaggerating his net worth, it is plentiful enough. Or, as he told Good Morning America in 2011: “That’s one of the nice things. I mean, part of the beauty of me is that I’m very rich. So if I need $600 million, I can put $600 million myself. That’s a huge advantage. I must tell you, that’s a huge advantage over the other candidates.”
  4. Ivy League credentials. Hillary Clinton has degrees from Wellesley (one of the “little Ivys”) and Yale. Trump got his bachelor’s degree from the University of Pennsylvania. Cruz was educated at Princeton and Harvard, and Sanders received his degree from the University of Chicago. This trend isn’t new: Obama graduated from Columbia and Harvard, George W. Bush from Yale and Harvard, Bill Clinton from Oxford and Yale, and George H.W. Bush from Yale. All recent Supreme Court justices are Yale or Harvard Law School graduates. Don’t be fooled by stories about the declining power of old boy and old girl networks, or by tales that a strong education advances worldly fame or success, at least at the top of the pyramid, more than where you go to college, graduate school, or law school.
  5. New York connections. More money and more connections. Trump, a New York real estate magnate, and Clinton, a senator from New York, have been able to build upon their geographical connections to finance and wealth. All Republican presidents from Hoover onward, apart from war hero Eisenhower, have been from the big, moneyed states of California, New York, or Texas. Add Massachusetts to the list, and both parties have usually had a major candidate, if not actual nominee, from one of those four states for the past 80-some years. (Cruz, of course, is from Texas.) Bigger states also add to fame and electoral votes, not just money and connections.
  6. Presidential campaign experience. Everyone remembers that Clinton ran before, but you might not remember that Trump floated the idea of running in 1988, 2004, and 2012; in 2000, he won two primaries under Ross Perot’s Reform Party banner. Of course, here we have nothing new. Many presidents—including Kennedy, Johnson, Nixon, and both Bushes—previously ran for president or vice president or knew what to do from participating in their fathers’ efforts.
  7. A sense of destiny. Both major party candidates feel like they have worked hard and paid their dues, that others are conspiring to deny them something they have earned, and that they personally must acquire power to fight for our rights. Perhaps this is a requirement for anyone running for president.
  8. Birth year 1946-47. Malcolm Gladwell has commented on the power of small cohorts, ranging from late 19th-century industrial monopolists to leaders of the IT revolution, to dominate many thrusts forward. Consider, then, some birth years: Bill Clinton, George W. Bush, and Donald Trump, 1946; Hillary Clinton, 1947. Maybe this is the JFK factor: the excitement of the Kennedy-Nixon election and the resulting attraction to politics of those in late adolescence in 1960. But whether a random event or not, soon we will likely have 20 to 24 years of the presidency held by people born within either a 2- or 14-month period. Perhaps less repeatable than other attributes noted above. Or is it? Twenty-one senators were born between 1944 and 1950.

Opportunity for All Isn’t Gonna Happen on This Path

Over the past 30 or 35 years, income and government spending per household have both about doubled, but working- and middle-class Americans have seen much less improvement in their earnings, wealth, education, and skills than they did in earlier decades. The international economy and the concentration of power within the top 1 percent are major factors, but it’s hard to believe that we can’t do a lot better with the $60,000 in federal and state spending and tax subsidies we spend annually per household, or the $2 million in health, retirement, education, and other direct supports scheduled for each child born today. My recent study finds that the US budget is moving increasingly away from promoting opportunity for all.

At the same time, Hillary Clinton, Donald Trump, and almost everyone running for office ascribe to the notion of America as a land of opportunity while telling supporters they are being denied the opportunities owed them. But it takes more than rhetoric to climb out of our current political pit.

In the study I draw three major conclusions:

  • First, the few programs that attempt to promote opportunity, such as work incentives and education, are scheduled to take a smaller share of available federal government resources. There is one major exception: large tax subsidies for housing and for employee benefits like retirement accounts continue to expand. However, by largely excluding low- to middle-income households, those programs show how today’s programs largely fail to promote opportunity for all. That is, they are not inclusive opportunity programs. Figure 1 summarizes these results.
  • Second, if we wish to promote opportunity for all, we must carefully discern the outcomes pursued and judiciously measure how well programs achieve those outcomes. “Opportunity for all,” if left amorphous, lacks any prescriptive power, leads to claims that anything the government does or stops doing can promote opportunity, and, as long as the intended outcomes are unspecified, prevents assessing program performance. I suggest that opportunity for all is not simply an equity objective: it pursues outcomes centered on growth over time in earnings, employment, human and social capital, and wealth while it emphasizes inclusion, especially of low- and middle-income households. And I suggest that we can and should measure most programs by their performance on that opportunity standard, even if the primary standard by which they are judged—such as retirement, food security, or even defense—seems initially removed from that opportunity focus.
  • Third, there’s tremendous budgetary potential for promoting opportunity whether the government increases or decreases relative to the economy. Realizing this potential doesn’t require moving backward on other fronts but shifting tracks, as from north to northeast, to also move forward on the opportunity front. The trick is to channel a larger share of the additional revenues provided by economic growth toward an opportunity agenda. Ten years from now annual federal spending and tax subsidies are scheduled to increase some $2 trillion (or roughly $15,000 per household), but essentially none of that growth goes to opportunity-for-all programs. Children receive almost nothing a decade hence, while interest on the debt rises significantly because we are unwilling to collect enough taxes to pay our bills as we go along.

When you look at these numbers, it seems clear that reorienting budget priorities could help provide opportunity in ways likely to promote equality in earnings and wealth. What is also clear, however, is that small ball is not going to get the job done when so much in the budget is moving in the direction of deform, not reform.

Figure 1
Total Outlays and Tax Expenditures for Major Budget Categories under Current Law
Billions of 2016 dollars

figure 1

Source: Author’s tabulations of Congressional Budget Office data.
Notes: Public goods include such items as defense, infrastructure, and research and development that benefit the population broadly. Direct supports are programs and transfers that directly benefit households and communities, such as health care and education. Within direct supports, income maintenance programs such as Social Security, Medicare, and SNAP (formerly food stamps) protect a certain level of income and consumption, while opportunity programs aim to increase private earnings, wealth, and human capital over time. Largely inclusive opportunity programs benefit low- and middle-income groups, while noninclusive opportunity programs largely exclude them or provide them with fewer supports than upper-income groups.


EITC Expansion Backed By Obama and Ryan Could Penalize Marriage For Many Low-Income Workers

President Barack Obama and Speaker Paul Ryan have proposed similar expansions of the earned income tax credit (EITC) for low-income workers without children. Their goal is laudable: to provide some modest additional income support for low-income workers currently excluded from the EITC. But as designed, their proposals would penalize many low-income workers who choose to marry or are married. Taking that step would not only provide a disincentive to marriage, it would be unfair to many married couples and erode support for the credit itself and for wage subsidies more broadly.

Fortunately, they can fix this flawed design by splitting credits for low-wage workers and benefits for children. Before I explain how, here is a bit of background.

The EITC, enacted first in 1975 under President Gerald Ford, has been expanded under every succeeding president and has broad bipartisan support. As cash welfare programs like Aid to Families with Dependent Children (AFDC) and its replacement, Temporary Assistance to Needy Families (TANF), have shrunk as a share of both the economy and the budget, the EITC has become a bedrock of the nation’s social welfare structure and the largest government cash support for those neither retired nor disabled.

About 97 percent of EITC benefits, however, go to households with children, particularly single parent families. The very small sliver going to single individuals through the so-called “childless worker” credit is limited by a maximum of less than $600 and is completely phased out at less than $15,000 of income, or less than what would be earned at a full-time minimum wage job. By contrast, the EITC can provide close to $6,300 in 2016 for a single parent with three children and is available to families with up to $48,000 of income ($53,000 in the case of married couples).

Obama and Ryan would double the childless worker credit and increase the income levels at which it phases out. A similar though higher level of credit was provided by the Paycheck Plus Project in New York City, which offers some individuals up to $2,000 and even allows a modest credit for those making up to $30,000.

There’s a glitch in these proposals, however, and it’s a big one. For instance, one report suggests that Paycheck Plus provides “more generous support to all low-income workers.” But in reality it doesn’t. Many low-wage workers who marry into families not only lose their own childless worker credit, but also reduce the normal credit available to their partner with children.

Here’s one example of how they lose out. A childless male making $11,000 qualifies for a credit of $1,011 under the Obama-Ryan model in 2016. If he marries a spouse with two children making about $20,000 and getting a credit of $5,172, they would get only one credit of $4,018, a loss of $2,165 from the combined credits of $6,273 they had before marriage.

As a result, the credit Obama and Ryan both support would penalize many married couples, while encouraging low-income couples to delay marriage and household formation. Because these penalties would be quite transparent to millions of married couples filing their tax returns, they would likely erode support for the EITC in general.

There is an ongoing debate about how much a marriage penalty actually affects decisions to wed, but there is little doubt that avoiding marriage is THE tax shelter for low- and moderate-income individuals.

The problem can be fixed by separating credits for low-wage work and benefits for children. My Tax Policy Center colleague Elaine Maag and I have proposed this separation as a way to expand work supports for both groups largely left out now: the childless worker and low-wage workers who marry. As for the single head of household, her current credit would be replaced by two credits: one for households with children and an additional low wage worker credit based solely on earnings regardless of children. They’d phase in and out at roughly the same income levels and add up to roughly what she received under the old EITC.

Meanwhile, both the single person without children and the low-wage worker who marries into a family could get the new low-wage worker credit whether or not the family has children. Married couples with two low-wage workers would usually be better off, as now the addition of a worker to the household usually typically adds to rather than subtracts from total household credits received. Though we phase out the low-wage worker credit for those married to high wage workers, these are families for whom any EITC marriage penalty would be a smaller share of total income and who, at their income levels, largely benefit from marriage bonuses from other parts of the income tax rate structure.

The structure of any EITC is hard to summarize in a short column. The main takeaway is that the President and the Speaker could fix their proposals to do what they say they want—cover those low-wage workers now largely left out. And they could do it without penalizing those who vow commitment to their partners and their children.

This post originally appeared on TaxVox and UrbanWire.


What is Our Part in Making the Country Great Again?

Presidential campaign slogans often appeal to progress. Donald Trump’s has attempted to trademark “Make America Great Again,” claiming authorship of the same theme Ronald Reagan used in 1980. Barack Obama got great mileage in 2008 around his “Yes, We Can” theme. Compare on an optimism scale Franklin Roosevelt’s “Happy Days Are Here Again” with Herbert Hoover’s “We Are Turning the Corner,” and you can see one more reason Hoover lost that 1932 election.

Though I believe we should be optimistic about our future, these slogans, along with presidential campaigns more generally, pretend to offer one easy solution to thousands of very complicated problems. At their most basic, the slogans and campaign promises appeal to the notion that if we elect the right president, then progress, greatness and happiness will follow right behind. And, if our candidate is elected, we can feel really good about our achievement: we’ve won the Super Bowl of politics.

By simply choosing between candidate A and B, suddenly we can solve not just how to administer thousands of programs that together spend close to $4 trillion a year, but how to improve economic growth; address social ills; stop international terrorism; deal with worldwide economic, social, and military forces that lead to mass migration—or at least stop them from spilling over our borders; pay people to retire for one-third of their adult lives; make sure that households don’t have to pay more than $5,000 for the $24,000 worth of health care they now receive on average; keep taxes low and debt sustainable; and, of course, regulate the environment, occupational safety, and the financial industry, among others.

But where do we fit in? Do we solve the country’s problems by increasing our benefits from some government programs? By lowering our taxes? That’s what the campaigns tell us. We’re going to get more from or pay less to government AND make the world a better place along the way. Gosh, we’re good.

Identify, if you will, one candidate for president or Congress who doesn’t tell at least 90 percent of us that we are about to get something more from government if we elect her or him. Oh, a few might get less—you know, those lazy people on welfare or those rich tax avoiders who aren’t going to vote the same way as us anyway. Their losses will finance our gains, and $100 billion of higher taxes or lower benefits for a few will somehow cover $1 trillion worth of lower taxes (or higher benefits) for us.

The one-vote-solves-all mantra adds to our sense of dependence and incapacity to make the world better. What does it matter if we work harder or tutor or in other ways provide services and goods that others need? Why should we spend less on alcohol or fancy cars and donate the proceeds to some worthy cause when our contribution is just a drop into the bucket? Why should we fight terrorism by donating to the education of women in poorer countries when we can always send out more troops or bring them home, or raise others’ taxes or lower ours so the economy grows? Why should we gather in our community to address the social ills that threaten a significant portion of its children?

Why can’t others see the solution? We vote the right way, but they don’t; that’s why our problems aren’t solved. Sometimes we win, but then our successful candidate turns coat and fails to solve old problems while allowing new ones to arise. Or our favored son or daughter really tries when elected, but those others deny our democratically achieved victory from attaining its complete fulfillment.

It’s them again; it’s always them.

There is an alternative view. I firmly believe that what we are and what we achieve as a people derives from the sum total of what all of us do. Government can often help us combine our efforts, and, yes, government can block progress as well. Either way, it’s a damn poor excuse for our own failure to act well when we can and our tendency to blame others to excuse our own inaction.

So, yes, let’s engage fully in the elections. Let’s also be optimistic about the future when we live in a nation never so rich throughout all of history, and stand on the shoulders of those who went before us, who added to our store of knowledge, and sacrificed to make our own world a better place. At the end of the day, let’s also admit that progress derives from everyone’s efforts and reject wholeheartedly the dependency that derives from the notion that our role in advancing society comes mainly from flipping a toggle switch.