Democratic presidential candidate Sen. Kamala Harris of California seeks support at a town hall meeting in North Las Vegas.Photo: Santiago Mejia / The Chronicle
March 6, 2019
Updated: March 6, 2019 – 4:53 p.m.
LAS VEGAS — Even at this early stage in the presidential race, California Democratic Sen. Kamala Harris has hit upon a crowd-pleasing proposal: Give a $500 monthly tax credit to families earning less than $100,000.
But while it has become Harris’ surest applause line at campaign appearances, some economists caution that it will never pencil out — that it will pile onto a national deficit that is already projected to top $1 trillion a year in the early 2020s and cost the economy more than 800,000 jobs. Harris is undeterred.
“Let me tell you how we’re going to pay for it,” Harris said during a town hall event last week in North Las Vegas, Nev. “We’re going to repeal that corporate tax cut that was passed (in 2017) to benefit the top 1 percent and the biggest corporations in America.”
Many of the 600 people at the Canyon Springs High School gymnasium roared their approval. The tax credit proposal was also warmly received when Harris spoke to 1,200 professionals at the Black Enterprise Women of Power Summit in Las Vegas.
“That’s what drew me in,” said Gwatoh Kroma, a consultant who heard Harris speak at the conference. “It is a tangible policy where you can see where it can help people.”
Harris announced the Lift the Middle Class Act in October, when America’s political attention was focused on the bruising final weeks of the midterm elections. She reintroduced it in January in the Senate, where it will go nowhere under GOP rule. Perhaps that’s why nobody has co-sponsored it.
Nevertheless, it is turning into a hit on the trail.
Under her plan, single taxpayers would receive up to $3,000 a year, while married couples would max out at $6,000. Nearly all the benefits would go to those making $87,000 a year or less, according to an analysis by the Tax Policy Center, a nonpartisan think tank backed by the Brookings Institution and the Urban Institute.
Two in every three taxpayers making between $25,500 and $50,000 would get the dollar-for-dollar reduction in tax liability, averaging about $3,200, the center found. About 56 percent of those earning less than $25,000 would get a tax rebate, also of about $3,200, the study found.
Before she talks about her idea, Harris typically points to a Federal Reserve study last year that found that 40 percent of families don’t have enough money to cover a $400 emergency expense.
“That could be the car breaks down, an unexpected bill,” Harris told the North Las Vegas audience. “America’s economy is not working for working people today.”
But there are potential problems with Harris’ plan, according to some who have analyzed it. For starters, even though the senator is also proposing a still-unspecified tax on financial institutions, the package might not pay for itself, the Tax Policy Center said.
“The two ideas she has proposed — repealing provisions of the (2017) Tax Cuts and Jobs Act that benefit taxpayers with income in excess of $100,000 and an unspecified tax on large financial institutions — would fall far short of that goal,” the center said.
Another challenge with Harris’ legislation: She says she will pay for the program by rolling back 2017 tax-bill benefits that went to “the 1 percent,” which are families with an annual income of at least $421,926, according to the Economic Policy Institute. But her bill specifies that the 2017 changes would be repealed for those who earn more than $100,000, which takes in far more people than just the nation’s richest 1 percent.
And an analysis by the nonpartisan, business-friendly Tax Foundation found that Harris’ plan would “reduce economic output by 0.7 percent and result in about 825,906 fewer full-time equivalent jobs.” The authors say the tax credit could prompt some people to reduce the hours they work or even leave the labor force.
Plus, the analysis found that Harris’ tax cut “would reduce federal revenue by $2.7 trillion over the next decade.”
Republicans say it’s an example of Harris making promises that would require huge quantities of tax dollars to fulfill. She also supports a Medicare for All health care plan and the Green New Deal, a nonbinding congressional resolution that calls for the U.S. to run on 100 percent renewable energy within 10 years.
Harris will have a hard time persuading voters to “revert to the failed policies of the past that would cost taxpayers trillions of dollars and stunt our country’s roaring economic success,” said Renae Eze, a spokeswoman for the Republican National Committee.
To read expanded article, click here.