The tax credit plan by Sen. Kamala Harris may be free money, but it’s certainly not the “socialism” that some critics claim. In fact, without a decent job, it would barely lift many California families out of poverty.
Under the proposal that Harris outlined last week, earning national attention, families could get a tax credit of as much as $500 a month or one lump sum of $6,000.
With some help on the math from the nonpartisan California Budget & Policy Center, here’s what the Harris tax credit would mean in real life for those who need it most. A family would have to earn at least $6,000 a year (the equivalent of working 10 hours a week at a minimum-wage job) to get the full credit of $500 a month.
Add up those benefits and earnings, and that’s $23,445 a year – below the official poverty line of $25,100. The Harris tax credit would boost that family above that line.
Or, considered another way, combine all of that with the $2,400 federal earned income tax credit and $2,032 state EITC that this family of four also would be eligible to receive, and the Harris plan would lift them above the supplemental poverty line, too. This cutoff accounts for the higher cost of living in most of California, especially for housing and health care.
These tax credits are all about rewarding work and making sure no full-time worker lives in poverty. That should be something people of all political persuasions should get behind.
The Harris plan is also good politics, as the senator tests the waters for a potential 2020 presidential run, including her first big trip to Iowa this week. She and other Democrats want to repeal and replace the irresponsible $1.5 trillion tax cut pushed through by President Donald Trump and Republicans in Congress last year.
That plan was mostly a giveaway to the rich and to corporations. Trump is revealing that truth by now promising at campaign rallies to pass a “very major tax cut” of about 10 percent to provide relief for the middle class. Wasn’t the earlier tax cut supposed to do that?
House Republicans, of course, are doubling down. In September, they passed a bill to make permanent the 2017 tax cuts for individuals and small businesses. That wouldn’t be good for many California taxpayers, and it would add another $545 billion to federal deficits over 10 years. That’s on top of the $1 trillion projected from last year’s tax cut.
For a party that once cared about the deficit, Republicans are remarkably hypocritical. Fortunately, it doesn’t appear the Senate is going to go along with the House bill.
Making the 2017 tax cuts permanent also would lock in the $10,000 cap on the deduction for state and local taxes. More than a million California taxpayers claim more than the limit — an average of $18,517 in 2016. So on average, their taxable income will be about $8,500 higher, leading to $2,000 to $3,000 more in taxes owed. For many Californians, that’s more than any benefits from the tax cuts.
Replacing the Trump tax cuts with the Harris plan, or something like it, can’t come soon enough.