Convening #3 The Federal Legislation Landscape

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Topic

The Federal Legislation Landscape: Child Tax Care Credit and the Fight to Make to Permanent, A Guaranteed Income for the 21st Century, Federal Income Exemption for Guaranteed Income Pilot Participants

Preparation

In preparation for this meeting please review the following resources:

• Fact Sheet for Child Tax Credit Expansion

• Fact Sheet for A Guaranteed Income for the 21st Century

SUMMARY  

1. Child Tax Credit (CTC) & the Fight to Make it Permanent

Anna Aurilio, Economic Security Project

The lessons learned over the last year helps to illustrate why we need a  child tax credit and why we should fight to make it permanent. We had the most unequal recession in history and we need to work hard to ensure it is not the most unequal recovery in history.

1. Lessons Learned from the Past Year – People need certainty. Over the past year we have seen unconditional cash targeted at the people who need it most is a powerful tool. We saw this over the past year with three rounds of economic impact payments going out to people, it lifted millions of people out of poverty. Yet, there is no certainty between those checks, months of wait time between relief bills meant people were waiting. One of the critical lessons learned is that people need certainty.

2. Child Tax Credit – The American Rescue Plan (ARP) contained a modernization of the CTC. For years, CTC was regressive, people who were making up to $400,000 would get the maximum amount and people earning very little would get nothing. Now under the ARP, the CTC is expanded to 27 million more people and the checks are advanced and monthly, effectively making it a guaranteed income for people with children.

We need Congress to make it permanent. This addresses the problem we started with – we need to make the recovery more equitable. Both checks and CTC have an outsized positive impact on Black and Latinx families.

1. How to Make it Permanent – The biggest barrier standing in our way is cost. It is hard to find any bipartisan support. Democrats will have to unify and use budget reconciliation to get this passed. The question becomes: How do we make this real for people? Over 85% of Democrats will receive the CTC benefit. In the last rounds of stimulus, the most popular component was the checks. We need people to ask their members of Congress to make it permanent.

Guaranteed Income for the 21st Century (report and proposal are not yet public)

Naomi Zewde, CUNY Professor

The Problem

• The U.S. tax code must be revamped to foster economic inclusion, social equity, and civic engagement. Guaranteed income would do just that by eliminating poverty, building economic equity, and lifting more families into the middle class. This proposal is similar to the EITC but bigger, better, and designed to target the people who need it the most.

• The EITC is the “earned” income tax credit, it is based on a wage requirement, which can perpetuate inequality. About half of Black children live in a household that does not make enough to earn the maximum EITC benefit. One in five Black children live in a household where they earn too little to receive any of the EITC.  They are too in need to be helped –  that does not make any sense.

The Proposal

• This proposal would remove the wage-earning requirement from the EITC and extend the negative income tax feature.

  • Every individual adult qualified to receive up to $12,500

  • Every household would receive up to $4,500 per child

  • Default is monthly installments

  • Supplemental to, not in replacement of, existing social safety net

The Impact 

• The proposal would lift all 14M households in poverty above the federal poverty line.

  • 7.3 million White households (8% of all White HH)

  • 3.6 million Black households (18% of all Black HH)

  • 2.35 million Latino households (17% of all Latino HH)

  • Most of 25M households just above FPL (working poor), elevated to 2x poverty limit (200-300% of FPL)

• The proposal would lift the 2019 median income, $59,000, would rise by roughly $5,700

  • Black ($39,000) and Latinx ($43,000) median income would rise by approximately $15,000 to the median

  • White ($68,000) median income would rise by a little more than $1,000

• This substantially closes the racial income gap and moves the U.S. toward racial equity.

Closing 

Darrick Hamilton, Founding Director of the Institute for Race, Stratification, and Political Economy at The New School

• In a just world race, gender, and nativity would have no value on material, psychological, or security outcomes. Yet it is evident that certain groups face greater vulnerabilities as the result of unjust historical and contemporary social and economic stratification. Racism is not just irrational prejudice, it is long leveraged strategic mechanisms of exploitation and extraction that have benefited some at the expenses of others.

• In the contemporary context, the heaviest toll of this pandemic, well beyond class falls on vulnerable racial and gender identity groups. The immoral devaluation of black lives has been ingrained in America’s political economy and it is long overdue for a reckoning. Many Black and brown families have low wealth, inadequate healthcare and work in precarious but essential jobs with lower wages and fewer protections.

• We do not have an adequate social safety net in place. What we have is 5 decades of deregulation under the lure that structures and government subsidies that benefit corporate interests would create market dynamics that would eventually “lift all boats”. This has not come to fruition. Incrementalism and changes on the margins will not cut it.

• Our economy can and should be grounded in different values. We need to make a profound change with government interventions to facilitate assets, economic security, civic engagement, human dignity, and social mobility for everyone.

• We currently manage the poor and income maintenance instead of empowering them. “Freedom” and “choice” are words used as weapons that feed into the proverbial American narrative of hard work providing riches and to absolve the government of social responsibility. What is not offered in this neoliberal paradigm is countless examples of hardworking people who are not able to obtain social mobility.

• Choice or freedom to describe the market but it is an illusion if you lack basic needs like a job, adequate income, shelter, food, and healthcare. It is wealth that gives us ultimate choice and economic freedom. Economic choice is grounded in resources. Those resources range from political to social to physiological and especially material.

• What I am presenting is not new, there is nothing new about the idea of an economic bill of rights. Roosevelt called for an economic bill of rights, knowing that “necessitous men and women are not free men and women.”

• The “Guaranteed Income for the 21st Century” proposes that the federal government use its most powerful fiscal tool: the US tax code to guarantee income and promote economic security.