THE WEEDS MATTER: The details of a no-tax-on-tips policy are especially important, and neither Harris nor Trump have spelled out much more than that slogan. Many analysts assumed that Trump wanted to exempt tips from both income and payroll taxes when he first floated this idea in June, a proposition that would cost in the neighborhood of $150 billion to a quarter-trillion dollars over a decade, according to the Committee for a Responsible Federal Budget. Why that wide range? In large part because of the uncertainty of how easy or difficult it would be to reclassify ordinary income as tips. And yet: The GOP bill that has gained the most traction, including the support of all but one of Nevada’s Democrats on the Hill, would only exempt tips from the income tax. That’s far less expensive, maybe more like $90 billion to $140 billion over 10 years, CRFB says, and would seemingly put less of a strain on a central funding source for Social Security. Progressive groups like the Center for American Progress knocked that Republican measure for not doing enough to block workers, including those in white-collar jobs, from designating their income as tips. And like Trump’s idea for eliminating income taxes on Social Security benefits, an income tax-only exemption wouldn’t give much assistance at all to people at the bottom of the income ladder. As it stands, almost two in five tipped workers in 2022 made too little to pay federal income taxes, and that’s before accounting for any tax credits that might further reduce their liabilities, as Yale’s Budget Lab pointed out. (That’s before pointing out that only about one in 40 American workers, or 4 million in all, get tips at their jobs.) So in other words: The idea from both Trump and now Harris might not do as much to help those working-class voters as they might expect. Not for nothing: Harris came out in favor of the “no tax on tips” idea after receiving the endorsement of the Culinary Union — which endorsed a tax exemption for tips last month, even as its leaders suggested that they didn’t believe Trump was sincere in proposing one. The Culinary Union has floated the idea of pairing tax relief for tips with a mandate that states require workers to be paid at least minimum wage before any gratuities. (Nevada currently is one of seven states that already has that policy.) The vice president talked up raising the minimum wage directly before name-checking a tax cut on tips, and there definitely are some on the left who would think the sub-minimum wage for tipped workers is a more pressing problem. BUT WAIT, THERE’S MORE: If you’re in the mood for some further campaign tax whiplash — Sen. J.D. Vance (R-Ohio), Trump’s running mate, floated the idea of expanding the Child Tax Credit to $5,000-per dependent on Sunday. That would be two-and-a-half times the CTC’s current size of $2,000-per child, and $1,400 higher than the maximum per-child amount in the Democrats’ 2021 monthly child payment program which most Republicans strongly opposed. Vance didn’t get much into details during his interview with CBS’ “Face the Nation,” only saying that he wanted a “broad-based child tax credit” and that he believed Trump also wanted to expand the CTC. The GOP’s vice presidential nominee also blamed Senate Majority Leader Chuck Schumer for his handling of a bipartisan bill this year that would have expanded the child credit, as well as restoring key tax credits for businesses. Vance was one of the few GOP senators to praise that bill, but was out campaigning when a large group of his Republican colleagues blocked it about 10 days ago. By that point, the Senate vote was more about political messaging, because all momentum was gone for a bipartisan tax plan that sailed through the House in January. Even some supporters of that tax package believe Schumer could have handled it better, though it’s not clear what he might have done to win over GOP senators who believe they’d be better positioned to deal with tax issues next year, when they could quite easily control the chamber. Looking ahead: Vance’s comments come as there appears to be a growing big-picture split among Republicans over tax policy. More populist Republicans like Vance favor ideas like expanding the Child Tax Credit, an idea which has never gotten much support from, say, the editorial page of The Wall Street Journal. What’s unclear is how much support there would be for as expensive a proposition as a $5,000-per child credit, even among that more populist group of Republicans. As you might recall, GOP senators like Mike Lee of Utah and Marco Rubio of Florida had to fight pretty hard to get the $2,000-per child credit into the Trump tax cuts back in 2017. (The CTC is currently set to revert back to $1,000 per child at the end of 2025.) As we noted, Republicans also fought quite hard against that temporary pandemic-era CTC expansion, which maxed out at $3,600-per child, enacted by Democrats — though it’s fair to note that a lot of the criticism from the right was because of the loosened work requirements for that monthly program. In any event, Democrats called into question Vance’s sincerity on the matter, given that recent overwhelming Senate GOP opposition to the bipartisan bill that would expand the CTC. “If JD Vance sincerely gave a whit about working families in America, he would have shown up in the Senate a week and a half ago and voted for my proposal to expand the child tax credit and help 16 million low income kids get ahead,” said Senate Finance Chair Ron Wyden (D-Ore.), who wrote that bipartisan tax bill with House Ways and Means Chair Jason Smith (R-Mo.).
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