Reimagining the Tax Code, Getting There with Grassroots Activism

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Demonstrators rally against the GOP tax plan in front of the U.S. Capitol 

The House and the Senate have reached an agreement on the final GOP tax bill and plan to vote on it sometime next week. However, there’s still aggressive mobilization against the legislation, fueled by progressive organizations like the Not One Penny and Stop the #GOPTaxScam coalitions; Indivisible; and Americans for Tax Fairness. These groups are working hard to disrupt a tax agenda that overwhelmingly favors the wealthy, even though in all likelihood the bill will pass. Tim Hogan, spokesperson for the Not One Penny campaign, says that regardless the outcome of the bill, this mobilization is a victory “in the court of public opinion.”

Indeed, Americans are strongly against the bill: a Reuters/Ipsos poll found that nearly half of Americans who are aware of the legislation oppose it. And tax policy activism—a rarely- seen phenomenon—has played a role in raising awareness. This surge in activism could lay the foundation for a popular movement, not just reject the GOP’s giveaway to the rich, but to work toward a new, more equitable tax code.

In September, before the Republican tax proposals were released, Prosperity Now and PolicyLink, two economic justice organizations, released a report entitled “Making the Connection: Bringing Tax Wonks and Grassroots Activists Together to End Inequality.” The U.S. tax code, the report found, is an extremely “powerful lever … to drive inequality.” But as much as the tax code expands the divide between rich and poor, the report argues, that there is also serious potential for the tax code, reimagined, to bridge it.

And, as the report makes clear, that’s where activists could come in.

Not One Penny, spawned from April’s Tax March and officially launched in August, is a coalition of almost 50 organizations, demanding “Not one penny in tax cuts for millionaires, billionaires, and wealthy corporations.” While the Tax March largely brought people out to protest Trump’s refusal to release his tax returns, the organizers wanted to bring attention to progressive tax policies, too. Following the initial action, Not One Penny shifted its focus. This summer, with a Republican tax proposal looming on the horizon, the group began training activists in anti-tax policy organizing.

Months later, after the release of the Trump tax plan and the eventual passage of the House and Senate proposals, demonstrations are taking place across the country to protest these trickle-down economics-oriented plans. Recently, five protestors were arrested in Maine after conducting a sit-in in Republican Senator Susan Collins’s office; Collins is a potential “no” vote when the conference bill comes back to the Senate. And in the spirit of the holiday season, New Jersey activists have confronted their Republican representatives with tax-themed Christmas carols.

As the Senate debated their tax bill, groups opposing the legislation set up a “People’s Filibuster” to protest the GOP proposal. For over 30 hours and throughout the night, different organizations “sponsored” hours, inviting activists and advocates to tell their stories. The speakers warned about the damaging effects of the House and Senate proposals on specific sectors like health care and the environment, and on certain groups such as graduate students, people with disabilities, and young families.

The “Making the Connection” report suggests that these types of protests could be leveraged to advocate for fairer tax policies, as such tactics have not frequently been utilized in tax policy advocacy. The report found that while almost 60 percent of the activists it polled had recently attended a rally or protest on an issue of public concern, just 5 percent had recently attended a rally or protest related to tax policy.

The report’s authors further explain that such low mobilization in regard to tax activism could be attributed to tax policy’s “messaging problem,” as advocates and the general public commonly think of tax policy as “complex, unapproachable, and downright boring.” Major barriers to effective progressive tax advocacy include a “knowledge deficit” concerning taxes, and a lack of a personal connection to tax policy.

But not only does the tax code work to raise revenue for the government (which everyone knows about), it also helps American households build wealth (which fewer people realize). That may be because, in our current tax code, most tax benefits are funneled toward the wealthy. According to the report, the top 1 percent of households received more federal dollars than the bottom 80 percent. The mortgage interest deduction and property tax deduction? The government spends almost double on those credits for wealthier households than it does on Section 8 housing vouchers or Homeless Assistance Grants.

This preference for the wealthy is hard to detect, since programs like the mortgage-interest deduction are hidden inside the tax code, helping create a two-tier welfare system, where means-tested welfare programs for the poor are visible and known, but welfare programs for the wealthy, like deductions for homeownership, education, and retirement, help the rich build wealth but exist as “tax credits,” not “welfare.” The rich are lauded for taking advantage of the tax system (think of Trump saying that not paying taxes “makes me smart”), but means-tested welfare recipients are seen as moochers.

In other words, our tax code—even before the GOP makes it incalculably worse—exacerbates the nation’s vast economic inequality, in which the richest 1 percent of households own 40 percent of the country’s wealth. The tax code also contributes to the racial wealth gap, where the median white family owns 12 times the wealth of the median black family.

But, it also means that the tax code could also be a major force in reducing economic inequality. To right the imbalance and “shift the benefits distributed through the tax code to working families,” the “Making the Connection” report lays out concrete steps that advocacy organizations can take to make tax policy accessible to community organizers and grassroots activists.  

This support is necessary, says Jeremie Greer, Prosperity Now’s vice president of policy and research and a coauthor of the report, “because the personal connection to [tax policy] is underneath the tax code.” Greer says that “when [people] think about taxes, they think about the annual exercise of doing their taxes,” instead of associating the tax code with programs that help them.

For example, the tax code contains housing credits, credits for low-income working families like the Earned Income Tax Credit and the Child Tax Credit, and its revenue is used to help pay for programs communities rely on. One of the report’s survey respondents said that people often don’t realize that the EITC was the reason they received a tax refund. Another said that “many people don’t understand the connection between the taxes they pay and the roads they drive on or the schools their children attend.”

Other assistance programs outside the tax code are “very straightforward,” Greer says. Food stamps are for nutrition assistance. Housing vouchers help people with their housing. And the mortgage-interest deduction “is a wonky … and governmental way of talking about something,” he says. When talking to advocacy groups, Greer simply calls it what it is: a housing subsidy, which is one way to make tax policy clearer while helping people recognize how the tax code affects them personally.

Advocacy groups have been doing an excellent job of making the consequences of the Republican tax proposals both clear and personal. Lisa Beaudoin, executive director of ABLE New Hampshire, a disability rights organization, traveled to Washington for a recent Capitol Hill tax policy protest. She says, “Helping people understand the direct implications [that this tax bill has] in their lives … gives people something to hold onto and to fight for.”

The elimination of the individual mandate would threaten health care for millions of mostly low-income people. Multiple provisions, including the elimination of the medical expense deduction, would disproportionately hurt people with disabilities. And the reduction of the corporate tax rate is widely seen as a giveaway to wealthy Republican donors (as at least one Republican representative acknowledged).  

Anti-tax bill activism and the media coverage of the GOP bills have made an impact: Only 31 percent of Americans support the tax plan. But when the battle over the Republicans’ tax catastrophe is done, what will tax activists do then? It may be easier to advocate against polices that would be detrimental to low- and middle-income families than to campaign for fairer taxes, especially since progressive members of Congress have not put forth an omnibus proposal of their own.

Economist Gerald Friedman recently made the case at AlterNet that, “progressives should resist the temptation to simply attack the GOP giveaway to the ultra-rich; instead, they should articulate their own tax plan, one that would fund needed services, promote stable growth, and compensate the unlucky, including the victims of globalization.”

Many of Friedman’s policy proposals are not new to policymakers on the left; but they have not been bundled together in an overall progressive rewrite of the tax code. They include taxing capital income (such as profits from investments) at the same rate as income from work, and mandating new penalties on income stashed in offshore tax havens. Friedman also recommends strengthening the penalties on corporations that don’t provide benefits like health insurance and instituting a tax on carbon emissions.

The report’s policy proposals center on strengthening policies that already work, like the Earned Income Tax Credit (EITC) and housing policy. The EITC lifts millions of families out of poverty, but really only works well for custodial parents. Greer says that people without children, including younger workers and the elderly, should be able to benefit too.

One such bill introduced by two progressive Democrats, Ohio Senator Sherrod Brown and California Representative Ro Khanna, would greatly expand the EITC along Prosperity Now’s lines. The Brown-Khanna plan increases the value of the credit for working families and gives childless workers greater access to the benefit. The Center on Budget and Policy Priorities estimates that this proposal would lift the incomes of 47 million households.

By introducing such a congressional bill now, when the Republican majorities in each house have no intention of giving it a hearing, of course, is to lay the groundwork for a more progressive tax code if and when the Democrats return to power.

Another such proposal, Greer points out, would be to create a tax credit that benefits renters as well as homeowners. Support for families that rent could help move them into homeownership—a transformation that would be further incentivized if Congress permanently established a program like the First-Time Homebuyer Credit, which temporarily came about during the Great Recession.  

Progressive leaders can’t simply say “no” to the Republicans’ plan to alter the tax code, because the status quo isn’t ideal either. Instead, a new, progressive tax code could help eliminate income inequality, make the wealthy pay their fair share, and finally give low- and middle-income families the resources they need to lead lives that are economically secure. If Democrats can retake power and activists get the support they need to transform public tax discussions, the party could be prompted to adopt new policies (which would require reforming campaign finance to curtail the Democrats reliance on big money) to make a new tax code a reality.

This article has been updated.

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