Our guest blogger is Brian Levine, a Senior Policy Adviser at the Center for American Progress Action Fund.
The McCain campaign held a conference call today to attack the idea of providing tax credits to Americans that don’t pay any federal income tax. During the call, McCain economic adviser Douglas Holtz-Eakin said that providing these tax credits is simply “sending checks to individuals, many of whom may not even be working, and certainly have no tax liability.”
These low-income Americans, once preposterously referred to as “lucky duckies” by the Wall Street Journal, have long been a favorite target of the far-right. In the 1990s, Newt Gingrich called providing tax credits to Americans with no income-tax liability “welfare.” The McCain campaign has apparently decided to reprise this disingenuous attack.
The federal income tax isn’t the only tax that Americans pay. While the poor may not pay income taxes, they do pay federal payroll and excise taxes, as well as state and local taxes. The majority of Americans actually pay more payroll taxes than federal income taxes. Low-income Americans must pay payroll taxes on every dollar they earn. And payroll taxes are regressive – the highest earning twenty percent of Americans pay a lower average rate than the lowest earning twenty percent.
Refundable tax credits aren’t “welfare” – they are smart policy. According to a recent Urban Institute analysis, refundable tax credits “provide a much more even and widespread motivation for socially valued behavior” than other forms of tax incentives. John McCain apparently used to agree – his own health care plan includes refundable credits. But the McCain campaign won’t let consistency get in the way of bashing an easy target – in this case, “lucky duckies.”