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May 23, 2014

Love Taxing the Poor

Why Republicans Love Taxing the Poor

By Jonathan Chait

The reformist wing of the Republican Party, which has a new book of policy essays out today, is a coterie of right-leaning intellectuals engaged in the Lord’s work of reimagining a non-plutocratic agenda for the party. The eternal problem with the reformists, however, is that they’re all playing an inside game, vying for influence within the party and seeking the ear of its leading figures. The need to maintain the good graces of the powers-that-be causes them to couch their advice with a delicacy that routinely veers into outright fantasy.

Ramesh Ponnuru, one of the contributors to the new volume, provides a case in point. In his Bloomberg View column, Ponnuru argues that Republicans should counter the Democrats’ campaign to lift the minimum wage by proposing instead to increase the Earned Income Tax Credit, which “would give Republicans a way to show that they want to help the poor — and that their stated objections to raising the minimum wage are sincere.”

One problem with this plan to get Republicans to increase the Earned Income Tax Credit is that, as Ezra Klein points out, they’re currently fighting extremely hard to cut the Earned Income Tax Credit. Ponnuru’s column doesn’t mention this highly relevant detail.

What’s more, one of the main reasons the Earned Income Tax Credit exists is to cushion the impact of state taxes, which often force workers on the bottom half of the income spectrum to pay higher rates than the rich. And why are state taxes so regressive? Well, a main reason is that Republicans want it this way. The states that raise the highest proportion of their taxes from the poor are Republican states. The EITC is in large part a way of using the federal tax code to cancel out Republican-led policies of taking money from poor people, so naturally Republicans at the national level oppose it, too.

Should Republicans start endorsing plans to give poor people more money? Well, sure, that would be great. It would also be great if Boko Haram came up with some new policies to help educate girls. In the meantime, a more realistic goal might be to just stop hurting the poor.

Obviously, Ponnuru’s policy goal here is admirable. It would be lovely to have a Republican Party that was not monomaniacally focused on redistributing income upward. (How such a reform could be pulled off without upsetting the basic parameters of the party — no new taxes, high military spending, no cuts for current retirees — is a problem none of the reformists have answered and that probably has no answer.)

I can see why Ponnuru needs to present his idea, which is a 180-degree reversal of the Republican agenda, as “a way to show that they want to help the poor.” The trouble is they don’t want to help the poor, if you define "help" as “letting them have more money,” as opposed to "giving them the kick in the ass they need to stop being lazy moochers."

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