The Boldest Cash Transfer Proposal in Modern History
Right now, at the richest time in history in the wealthiest country in the world, millions of Americans are teetering on the brink of financial collapse. They are only one car repair, one medical bill, one family illness away from potential homelessness. This is not an accident, it’s a design feature — our economic system is built to benefit the very top, while everyone else is finding it harder and harder to make ends meet.
Fortunately, we have leaders already in office who recognize the struggle millions of Americans face in covering their basic expenses and are putting forward bold new legislation to provide financial relief to the working and middle class. A pair of new congressional bills aim to help offset the rising cost of living and housing, with both pieces of legislation incorporating key elements of the Economic Security Project’s Working Families Tax Credit.
The most recent bill, the LIFT the Middle Class Act, was introduced yesterday by Senator Kamala Harris of California. It provides relief for low and middle-income families with a new tax credit that puts money back in working people’s pockets — helping to lift them out of poverty or give them a buffer against unforeseen expenses. Covering households making less than $100,000 a year, the bill provides up to $500 a month as a regular drumbeat of financial security.
Here’s what leaders in the economic world are saying about the legislation:
“This remarkable bill recognizes the increasing economic challenges faced by ordinary Americans and uses the tax code to more fairly spread our nation’s prosperity to the families that need it most.” — Darrick Hamilton, Professor of Economics and Urban Policy, New School of NY
“Instead of doubling down on lavish tax cuts for people who should be paying more — not less — in taxes, we should be advancing ideas like these to raise incomes for working people.” — Indivar Dutta-Gupta, Co-Executive Director, The Center on Poverty and Inequality, Georgetown Law
Sen. Harris’s bill accompanies Rep. Bonnie Watson Coleman’s (D-NJ) EITC Modernization Act. Rep. Watson Coleman’s legislation expands eligibility for the Earned Income Tax Credit, the country’s most effective anti-poverty measure, to those who are going to college or providing unpaid care for a child or senior in their family. This would offer a measure of financial stability to both groups, helping them make ends meet while they do something positive for our community, and begins to recognize the massive amount of unpaid labor undertaken in our country, primarily by women. Both bills would offer recipients a monthly credit rather than receiving support only once a year.
This new wave of progressive policy to support the working and middle-class follows the introduction of the GAIN Act last year by Rep. Ro Khanna (D-CA) and Senator Sherrod Brown (D-OH), a bill that pushes the EITC further up into the middle class and significantly expands the amount of support that families earn. See why experts ranging from direct service providers to political scientists support tax reform to benefit working and middle-class Americans:
To complement the efforts at the federal level, we’re also working closely with partner groups to pass the Working Families Tax Credit in key states where momentum and political appetite are paving the path toward near-term success. You can learn more about state-based efforts in these reports from our partners in California and Washington.
While the details of each policy differ slightly, they share a common theme: establishing a financial floor for working and middle-class Americans. Essentially, they provide a guaranteed income for millions of working Americans — an idea that just a few years ago would have been viewed as far too radical for potential presidential candidates to embrace.
Thanks to a concerted effort by many of our partners, the power of unconditional cash is now viewed as the effective, viable policy intervention we’ve always known it to be. The Atlantic concludes, “Boosting the fortunes of the middle class and ending poverty are achievable policy goals, not moonshot ideas or flights of fancy. And Democrats want to achieve them by giving people cash.”
We believe it’s only a matter of time until the simple concept of enacting policies that put more cash in the pockets of hard-working Americans moves from a few forward-thinking leaders to a reality that offers financial opportunity to all Americans.