Given her liberal record , it’s no surprise that Vice President Kamala Harris ’s recently released economic agenda calls for vast increases in benefits for low-income adults. But it should be surprising for that spending to be cast as tax relief since low-income adults pay few, if any, federal income taxes in the first place.
That’s the spin Harris wants you to believe, and the media have swallowed it hook, line, and sinker. CNN was typical in headlining that Harris’s economic plan includes “lower-income tax relief.” But this characterization overstates any tax relief while providing rhetorical cover for Harris’s real goal: vastly expanding the welfare state and radically redistributing income.
The policies in question are called refundable tax credits, which originated in the 1970s and have grown in number and scope ever since. The name suggests recipients are merely getting a refund of taxes they already paid Uncle Sam. Instead, in a lexical sleight of hand that would make George Orwell blush, refundable tax credits provide benefit checks to those who don’t owe federal income taxes — in effect, refunding them someone else’s taxes.
Harris’s proposals call for expanding refundable tax credits in all directions at once. Parents would collect expanded child tax credit , or CTC, payments, which a campaign summary calls “ critical tax relief .” But that’s merely the revival of the Biden-Harris administration’s expanded CTC paid in 2021, plus an even bigger $6,000 payout in a child’s first year.
The Biden administration’s prior expansion temporarily converted the pro-work CTC into monthly “ child allowance ” checks payable even to nonworking parents. At the time, the administration claimed the expansion reflected a “tax cut for working families,” even though $88 billion, or 81% of the policy’s cost , went to benefit increases for lower-income households, turning the IRS into America’s leading dispenser of welfare checks . The expansion lapsed when its work disincentives and $1.6 trillion cost proved too much for even some Democrats to swallow. Yet now Harris insists on reviving it — and making the benefit payouts even bigger.
Then there’s her latest proposed expansion in earned income tax credit, or EITC, payments to lower-income adults without children. This would also revive a temporary 2021 expansion, which Harris’s campaign says “cuts taxes for front-line workers.”
Again, not so, as the 2021 EITC expansion consisted of almost 80% benefit increases . That’s consistent with the history of the EITC, which has always provided lower-income households benefit payments that far exceed tax relief .
And it’s an echo of legislation Harris considered her “ signature tax proposal” while in the Senate. That 2019 legislation would have created a massive new refundable tax credit program paying monthly checks to lower-income adults even if they had no federal income tax liability at all. If more federal cash sounds attractive, the legislation’s $3 trillion cost and work disincentives were not. But the vote-buying appeal was clear, as “ a large share ” of the new benefits “would go to adults ages 18 to 24.”
Harris’s latest plan also calls for paying first-time homebuyers $25,000 in “downpayment assistance.” The campaign offers few details but describes this as “significantly expanding” the “$10,000 tax credit for first-time home buyers” the Biden administration had proposed. Even spurring home construction involves — you guessed it — a “first-ever tax incentive for building starter homes.”
And the Harris campaign promises to “cut taxes” to “help Americans afford health insurance on the Affordable Care Act marketplace” without a hint of irony.
These plans would only expand an already-growing wave of benefits paid through the tax code. Even before pandemic expansions, a Tax Foundation analysis found tax credits had “increased nearly 10-fold” in real terms since 1990, with refundable tax credits for lower-income households leading the way. That naturally doesn’t include the 150 bills this Congress has proposed creating new or expanded tax credits, or Harris’s 2020 proposal to send $2,000-per-month refundable tax credit checks to most people , including nonworking adults, at an astonishing $21 trillion cost.
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Harris’s latest agenda doubles down on her longtime zeal to turn the tax code into a mammoth ATM redistributing income. It’s perfectly fine for her and other liberals to argue for enlarging the welfare state, but they shouldn’t get away with suggesting that this amounts to “ cutting taxes .” In fact, for millions of people, such claims are logically impossible since you can’t cut taxes for those who don’t owe them in the first place.
But Harris and her redistributionist allies remain undeterred by inconvenient truths like that.
Matt Weidinger is a senior fellow and Rowe scholar for the American Enterprise Institute.
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