Whatever else comes of it, President Trump's election has at least placed new attention on economically stressed families and discouraged workers. The anxiety among these voters was palpable, especially in the Rust Belt states of Michigan, Ohio, Pennsylvania, and West Virginia, which Trump won by historically large margins.
The role of these voters in the election helped to make my friend J. D. Vance's book Hillbilly Elegy a bestseller. Other authors have also explored how a changing economy and new patterns of family life have combined to make things more precarious for many people, especially those (the majority of Americans) without college degrees. Many fear this is shaping up to be a "miserable 21st century."
Candidate Trump promised working-class Americans tangible help. Jobs would return, paychecks would increase, and dignity would be restored. But policies to make good on those pledges have been elusive — let alone policies with bipartisan potential in today's poisonous atmosphere. One way to make progress would be to draw on proposals that have demonstrated success and have enjoyed broad bipartisan support.
As Congress takes up tax reform, two ideas deserve careful consideration. Tax reform legislation could expand the earned income tax credit, one of the most powerful initiatives the federal government has ever taken against poverty. The credit supplements the wages of low-income workers, and thus draws people into the labor force. It helps people, that is, get on the ladder of economic success. That's important for them, but also for our society at a time when labor force participation has been shrinking.
The earned income tax credit has enjoyed bipartisan support in the past and still does today. Both Paul Ryan and former President Barack Obama have called for expansion. President Trump has sometimes spoken positively about raising the minimum wage, which seeks some of the same objectives but has more drawbacks. An expansion in the earned income tax credit would deliver benefits to those in the workforce who need them most, while teenagers in affluent households would capture some of the gains from an increased minimum wage. Expanding the EITC also poses much less risk of destroying low-wage jobs.
Helping families with the cost of raising children is another area where bipartisanship may be possible. President Trump said during the campaign that government should change tax policy to make child care more affordable and should offer families with stay-at-home moms benefits at parity with other households. His main policy proposal toward these ends was an income tax deduction for the cost of child care, with the deduction capped in each state at the average cost of care.
A better way to help families would be an expansion of the tax credit for children. This policy would also accomplish the goals Trump advocated — tax relief for parents and parity for stay-at-home moms — but would do more than a deduction to help working-class and middle-class families. An expanded credit has also drawn interest from both Republicans and Democrats. Republican Sens. Mike Lee and Marco Rubio have argued that a larger tax credit, fully applicable against the payroll tax as well as the income tax, would rectify the overtaxation of parents. Hillary Clinton proposed during the campaign that parents of very young children receive a larger tax credit to help them cover the expenses of care.
Both policies would have an additional benefit: making tax reform less lopsided than it might otherwise be. Republican tax reformers believe that promoting growth requires cuts to the corporate tax rate and to income-tax rates, especially the top ones. But unless tax reform also includes other kinds of tax relief, its direct benefits will accrue only to the affluent and the business community — rather than to the more downscale voters who are struggling the most in this economy, voters that both parties have belatedly realized that they need to remember. Washington has left them out too often to leave them out of tax reform now.
April Ponnuru (@AprilPonnuru) is a contributor to the Washington Examiner's Beltway Confidential blog. She is a senior adviser at the Conservative Reform Network. Previously she was an adviser to Jeb Bush's presidential campaign.
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