The latest version of the New York Times’ weekly ‘Democrats’ New Message’ story is now available online. It’s dreary. (The coming election is to be about “Democratic values” vs. “misplaced Republican priorities.”) In contrast, Times senior writer Bill Keller’s otherwise surprisingly insular effort to craft a winning Democratic agenda contains a bold new initiative: Keller seemingly comes out against the Earned Income Tax Credit (EITC), which he calls a “well-intentioned gimmick” that overcomplicates the tax code.
Here, at last, is the potential key to a Democratic suprise in November. The EITC, after all, is the most popular and effective government anti-poverty program ever. It’s a “gimmick” that sends $30 billion a year to low-income Americans—$10 billion more than welfare does—yet it honors the work ethic, since it goes only to workers. The EITC turns out to actually encourage work (and boost national productivity) by luring more people into the labor force. By sending an extra $4,000 to a two-child family in which the breadwinner makes only $10,000 a year, the EITC is the answer to the left-wing gibe that full-time minimum wage work doesn’t lift families out of poverty. (With the EITC, it does.) Even most Republicans have been suckered by this sort of evidence in to supporting the EITC. What genius, then, for a Democrat to steal part of the GOP’s anti-government, poor-bashing “base” by attacking the stagnant, bipartisan pro-EITC consensus!
Why target the EITC? The tax credit creates opportunities for cheating, because it actually rewards low-income workers who declare extra income, while most of our tax mechanisms are designed to catch people who don’t declare income. To prevent fraud, the returns of the working poor—the income group that gets the credit—have to be relatively heavily audited, which upsets some people. Or at least it upsets the Times’ David Cay Johnston, who every few months writes an article complaining that the “Internal Revenue Service sharply increased audits of the working poor last year, while reducing to record low levels those of the highest-income Americans” etc. (For March’s installment, click here. For April, here. The Times editorial board has also weighed in.) How better to save the poor the hassle of paperwork and a possible audit than to take away the income that gets audited? That will even things out between the classes, audit-wise.
But the rationale hardly matters. It’s the concept that is breathtakingly ingenious. Only Nixon could go to China, and only a New York Times Democrat could destroy the EITC.