CLASP Principles for Federal Tax Policy: Executive Summary
Across America, families and communities need public investments that reduce poverty, promote economic opportunity for children and adults, and reduce racial and ethnic disparities. Taxes are the way we come together as a nation to make these investments.
In addition to providing revenue for necessary public goods, a well designed tax code can reduce poverty among children, workers and families, promote mobility, and combat the inequities caused by systemic racism. While the tax system includes some features that fight poverty—most notably the refundable Earned Income Tax Credit and Child Tax Credit—too often the tax code falls short and perpetuates racial and wealth inequality in our nation. And the tax code’s positive features often fall short of their full potential benefit to families with low incomes because of the challenges they face in accessing the credits they are eligible for.
The tax system has been an important tool in our national response to the interlocking health and economic crises caused by the COVID-19 pandemic. Policymakers used it to distribute stimulus payments in the spring of 2020. This effort highlighted the potential to rapidly deliver funds to many people. However, some people with the greatest needs were left out.
Taxes will necessarily be part of the political debate over the next years. Much larger investments are needed to support state and local economies, create opportunity, and begin to close the gaps caused by our nation's history of systemic racism. Policymakers will have the opportunity to undo the inequity of the 2017 tax law, reversing its giveaways to the richest households and large corporations. Proposals ranging from providing people with another short-term stimulus payment to permanent universal child allowances and basic income will use refundable credits as part of their delivery systems. This raises the question of what it will take so everyone eligible for these supports can receive them with a minimum of burden.
The Center for Law and Social Policy (CLASP) has developed these principles to provide a framework for policymakers and advocates that uses an economic and racial justice perspective to assess the range of proposals they will evaluate in the next few years.
Read the principles brief here.