Throwing the EITC on the Camp-fire

February 27th, 2014 at 8:28 am

Open my pantry door and my cats come running, expecting a treat.  Mention an increase in the minimum wage, and conservatives will tell you how much they love the EITC.

As I’ve stressed in many places, this is a non-sequitur.  It makes no sense to compare an increase in one policy (minimum wage), with the existence of another policy (the EITC).  You have to propose an increase in the latter.  (I’ve also stressed that the policies are complements, not substitutes.)

So what is Rep. Dave Camp up to by proposing a significant scaling back of the EITC in his new tax plan?  Under current policy, the maximum credit for a working parent with two kids is around $5,500 and that’s about what would accrue, e.g., to a single mom working full-time at the minimum wage.  But according to analysis by my CBPP colleagues, by the time his plan is fully phased in, she’d lose something like a whopping $2,000 compared to current policy, the equivalent of cutting her wage by $1 per hour (this includes Camp’s proposed changes to both the EITC and the Child Tax Credit).

So, here’s the Republican tax plan for helping low-wage workers: no increase in the minimum wage and a sharply reduced EITC.  Like I said yesterday, there’s parts of this plan that are worthy and even courageous, but this proposed change is really pretty shameful.

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5 comments in reply to "Throwing the EITC on the Camp-fire"

  1. The Raven says:

    (corrected second version)

    They’re tightening the screws, that’s all. It really does seem to be organized.


  2. Mark Jamison says:

    Republicans lately seem to offer with one hand and take away with the other. Here in North Carolina they eliminated EITC.
    I think that any reasonable observer has to conclude that these plans aren’t serious proposals that have any expectation of passing or even going through a mark up. These proposals are publicity offerings designed to give the impression that Republicans are serious about addressing our economic problems.
    I try to avoid guessing at people’s motivations but maybe we should take Grover Nordquist and other Republican rhetoricians at their word. Maybe they actually do want to kill government which would also presume a lack of concern for anything but the votes of those outside the top 5%.


  3. Larry Signor says:

    “…there’s parts of this plan that are worthy and even courageous, but this proposed change is really pretty shameful.”

    I believe similar things were said about the Ryan budget…Camp is simply attacking the safety net thru purported tax reform. It doesn’t matter how they kill the beast, just so they do.


  4. Perplexed says:

    It seems that there may be nothing to fear than the anxiety of the plutocrats itself:
    http://blog-imfdirect.imf.org/2014/02/26/treating-inequality-with-redistribution-is-the-cure-worse-than-the-disease/


  5. Fred Donaldson says:

    The Camp proposal replaces the EITC with a credit (Sec. 1103) against FICA taxes paid – reducing revenue to the Soc Sec fund, while it also offers a credit to employers of a refundable tax credit for the same amount. So, companies pay you less, you get a credit, and they get refunds on the FICA that they paid as their share for you. It’s a win-win for cutting pay.

    The EITC would then shift money from Social Security funds to the EITC individuals. The proposal also includes a new tax reduction for employers of EITC recipients for FICA payments for EITC workers.

    This is an obvious plan to eviscerate FICA revenues to prove the earned benefits are “not funded.” The reduction in FICA will not reduce benefits for the EITC recipients, but it will give the GOP another fake reason to complain that Social Security is going broke by lack of funding

    When will we stop taxing the working class by using payroll taxes for welfare (disability) expenses, and now a proposed EITC expense, that should come from general funds paid into by all, including the elite? Wage slaves paying for the welfare of poorer wage slaves is a great plan for the richest, whose taxes will drop under the Camp plan.


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