The voices of Tax Policy Center's researchers and staff
With the new Congress well into its legislative season and many Democratic presidential hopefuls in full campaign mode, policy ideas are flying fast and furious. But which should you take seriously, and which should you simply ignore?
I’m not thinking about the underlying merits of an idea, but about who presents it, why, and how. Does it really solve the problem it claims to address? Is it substantive or simply rhetorical? Is it specific or does it rely on vague generalities? Because I work at the Tax Policy Center, I’ll focus on tax proposals, but you should ask these questions about any policy proposals.
Is it specific? There are big differences between press releases and bills. Real legislation includes specific changes in the law. While a press release doesn’t, the pol who sends it still should tell us enough so we can judge its merits.
Take, for example, two Democrats who want to tax the rich. Presidential hopeful Senator Elizabeth Warren (D-MA) proposed a wealth tax. Rep. Alexandria Ocasio-Cortez (D-NY) proposed a top 70 percent tax rate beginning at income of $10 million. Warren has a relatively detailed plan. Ocasio-Cortez, by contrast, has given us little more than a number. For instance, she doesn’t say what the other income tax rates and brackets would be, or how she’d tax capital gains or dividends. We can analyze Warren’s wealth tax. There is no way to evaluate Ocasio-Cortez’s rate hike without making many assumptions about what else she’d do.
If it is a tax cut, how is it paid for? I can live with a lawmaker who forthrightly acknowledges his tax cut will add to the deficit. But if he says his tax cut would be funded by eliminating unspecified tax loopholes, he is not offering a serious—or, at least, a complete plan. Similarly, if a pol says his tax cut will pay for itself, just move on. Taxes do have revenue maximizing rates, but with few exceptions, claims that big tax cuts pay for themselves by growing the economy are not serious either.
It isn’t realistic to expect candidates to propose fully-formed bills that include those pay-fors. Indeed, any candidate that did would spend all his time defending his tax hikes or spending reductions rather than promoting his tax cuts. But at least give us some sense of where the money is going to come from. And convince us that you are serious about finding some way to offset the cost.
If it is a tax increase, will it really raise the revenue it promises? Democrats claim their plans to tax the wealthy will raise billions of dollars more than they really will. Republicans promise that cracking down on alleged fraud by low-income households will raise billions more than it really will. Until the Joint Committee on Taxation or independent analysts such as the TPC score an idea, be wary of promises of tax revenue falling from the sky.
Who is proposing it, and why? Divide this one into bills that have some chance of being passed and campaign ideas. When it comes to legislative proposals, lawmakers live in a hierarchy. Don’t expect a new idea from a freshman House Republican to get much traction this year, no matter how meritorious it is. The plan may one day get life, but not soon. And even if a bill’s sponsor is in the majority party and has seniority, is he willing to do the hard work necessary to round up the votes? It may be a priority for a lawmaker, but is it the priority?
And consider whether the author’s goal is to change the law, or merely to send a message—or perhaps reframe an issue. No one expects the House resolution that describes the Green New Deal to become law any time soon. But it has become a symbol—both for progressive Democrats who have made it something of a litmus test for party candidates, and for Republicans who use it to show how unrealistic Democrats have become.
Just as Congress has a hierarchy, the Democratic presidential hopefuls will sort themselves over the next year. Most will never get out of the single digits in public opinion polls and never raise the money they need to run competitive races. But by January, a handful will make it to the top tier. That’s when you’ll want to pay close attention to their ideas.
That is not to say that those leading candidates won’t lift a proposal or two from an also-ran. But until they do, the grand plans of second-rate candidates will be forgotten as quickly as their sponsors.
The bottom line: Take all tax plans with a grain of salt, but take some of them more seriously than others.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
Charlie Neibergall/AP Photo