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Politics

Trump's tax proposal won't actually help the middle class. Here's what would.

Catherine Rampell on

A real middle-class tax plan would likely include a large expansion of the earned income tax credit.

For decades, the EITC has supplemented lower-income people's pay through a tax refund. It's pro-work, because it increases the payoff from holding down a job. It also meaningfully improves working families' living standards.

Given these selling points, the EITC has historically enjoyed support from both Republicans and Democrats. In recent years, both Ryan and President Barack Obama proposed making it more generous to workers who don't have custody of a minor child.

Curiously, though, the current GOP framework says not a peep about this powerful tool.

Fortunately, there's an (admittedly expensive) off-the-shelf policy available: a Democratic plan to expand EITC eligibility up the wage ladder, to households making as much as $76,000 depending on family size. The legislation would also roughly double the maximum size of the EITC for working families and almost sextuple it for childless workers.

These expansions are designed to help middle-income workers "reclaim" the pay they would have received had there not been decades of wage stagnation, the House bill's primary sponsor, Rep. Ro Khanna, D-Calif., told me in a recent interview.

Khanna also observed that expanding the EITC is a much more direct way to raise middle-class families' earnings than some Rube-Goldberg-like corporate tax-code machinations.

"Trump is saying he's going to cut the corporate tax rate in order to raise your wages," Khanna said. "I'm saying: Let's just raise your wages."

We could also help middle-income families by expanding the child tax credit.

The GOP tax plan does include an expansion of this credit, to be sure. But what they've announced so far doesn't do much for the middle class.

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