The Tax Foundation, that propaganda tank that masquerades as a "nonpartisan" "think" tank, is at it again. Now it's pushing the right-wing agenda of ending any tax expenditures that redistribute resources down to those in the lower-income distributions. It's produced a study on the "benefits" of eliminating the Earned Income Tax Credit that often makes the difference between food security and living in your car for the working poor. Erik Wasson, Tax Foundation Charts Benefits of Ending Earned Income Tax Credit, The Hill (Aug. 6, 2013).
The Tax Foundation "study" includes various right-wing assumptions about the working poor and the benefits of tax cuts that are not empirically supportable.
1) While conceding that the EITC helps the "really" poor, the Tax Foundation repeats the old right-wing saw that those working poor who aren't "really" poor will be disincentivized to work by having the EITC, in essence making that old Romney claim that the EITC is a "bad" policy because it provides aid to the poor, which will keep them from taking "personal responsibility" and thus keep them from getting those multiple jobs that would provide them the same sustainability that the EITC provides. Here's how the Hill story describes the report on this point:
The report argues that the tax credit encourages work for very low wage individuals but serves to discourage work for those making more because the refundable credit phases out. Id.
The undertone is that poor people are lazy, so government help should be limited to the really destitute, else it will just encourage laziness.
These assumptions are integral to the Chicago School's economic analysis, which depends on nice mathematical equations about humanity that assumes away most of what makes us human, including the fact that we are quite different from one another. Chicago School ideology says that if you give somebody something, they will become essentially addicted to the freebie and no longer work. Do you know anybody for whom that is true? I don't. I know people that my family has assisted through hard times who have worked even harder to show their gratitude for helping them through a tough spot. The Tax Foundation folk apparently see only the mythical "welfare queens" when they think about the EITC.
2) Instead of giving the money to the poor, the Tax Foundation calculates that we could use it instead to provide a rate cut for those who pay taxes of about 5.7%. Now that is outright redistribution upwards. Because of the personal exemption and standard deduction and EITC, most taxpayers in the bottom two quintiles pay no or very little income tax. The benefit to those low-income taxpayers would be redistributed upwards (the only kind of redistribution that the right likes, apparently) to those in the top three quintiles. Ending one of the best anti-poverty/food-security programs in the country in order to add some more to the pockets of the have-mores.
3) Oh, and the Tax Foundation makes their End EITC Now agenda even rosier by assuming a dynamic scoring of the elimination of the EITC--with those poor families not receiving needed aid, the Tax Foundation says the economy should grow by an additional $29 billion above and beyond the dollars saved that currently go to the EITC! Jobs would flow from just cutting out this assistance for poor people.
[E]liminating the Earned Income Tax Credit would increase employment by 274,000 full-time equivalent jobs. Eliminating it and lowering tax rates by 5.7 percent across the board would create 783,000 jobs, the study says. The jobs would come in a five to 10 year timeframe, study author Michael Schuyler said. Id.
Now, maybe those rich guys getting the extra tax break will indeed make more money--but the odds of that money being invested in the US are slim, don't you think? And when poor families lose both food stamps (see yesterday's posting about the right-wing's effort to ensure that families placed on the brink of desperation by the financial crisis will be shoved over the cliff by not having enough food) and the EITC, they will cease being participants in the economy and become drains on local city, county and state budgets. They aren't going to get jobs that aren't there. And jobs aren't going to be created by the money "saved" from not helping poor working families. The Tax Foundation study's proposal is not a recipe for economic growth, but another example of the right's class warfare against everybody who isn't already in the upper class and that's a recipe for economic disaster.