The voices of Tax Policy Center's researchers and staff
One of the very oddest things about the bizarre debate over whether to increase the latest round of direct government payments from $600 per person to $2,000 was the way pols framed the issue. The payments actually are refundable, advanceable credits against the individual income tax. Thus, they are tax cuts. But almost nobody described them that way.
And I can’t help but wonder: Would so many Republicans have opposed them if President Trump and congressional Democrats promoted them as tax relief for more than 130 million Americans?
There is lots of behavioral research that shows how framing modifies the way people respond to tax policy changes, whether tax increases or tax cuts.
“Tax relief” is a winner
In general, if policymakers call something a tax increase, people will oppose it—especially if they think they will have to pay it themselves. If lawmakers call it a fee, or mask it entirely (think amusement taxes buried in ticket prices or electronic fare or toll passes) people are much less likely to notice. Or object.
Similarly, tax cuts—especially those that are perceived as benefitting the middle-class--tend to be more popular than government spending programs even if they benefit the same people. University of California at Berkeley linguistics professor George Lakoff persuasively argued more than a decade ago that calling a policy “tax relief” was a political winner.
His model, in fact, was the rhetoric of Republican President George W. Bush, who persuaded Congress to adopt big tax cuts two decades ago. While some Republicans are less comfortable with refundable tax credits that benefit individuals who pay no taxes, the party generally loves tax cuts and loathes government payments.
A muddled messsage
Yet, the messaging around the recent direct payments was a muddle. Many pundits and policymakers called them stimulus checks, though they will be neither stimulus nor even, for the vast majority of recipients, checks. The IRS used the more anodyne “economic impact payments” last Spring but is calling them “recovery rebates” this time around, though neither phrase means much to most people.
But Trump never described the idea as a tax credit or a tax cut. And he certainly never used Lakoff’s “tax relief” frame. One result of his curious language choice, as Washington Post columnist Catherine Rampell tweeted the other day: “Really, such a weird turn of events when GOP is arguing against tax cuts for 94% of households and "progressives" are arguing for them.”
Socialism for the rich
Certainly, Trump’s framing made it easier for Senate Majority Leader Mitch McConnell (R-KY) to reject the president’s plan to expand the payments to $2,000. Of course, McConnell laid the maternity of the idea of bigger payments on House Speaker Nancy Pelosi (D-CA) to avoid criticizing Trump. Still, his argument was straight-forward enough: “The data show that many upper-middle-class Americans have kept their jobs, worked remotely, and remained totally financially comfortable. We do not need to let the Speaker of the House do Socialism for rich people.”
It seems implausible that McConnell would have described tax cuts for individuals making $75,000 or joint filers making up to $150,000 as “Socialism for rich people.” At least he seemed disinclined the make that argument when the Senate passed, with near-unanimous GOP support, the 2017 Tax Cuts and Jobs Act (TCJA) that was far more beneficial for “rich people.”
For the record, the Tax Policy Center estimates that about 45 percent of the benefits of the latest $600 version of relief checks will go to households making $51,000 or less, and two-thirds to those making $91,000 or less. While the highest income households would0 do somewhat better with $2,000 per person payments, the TCJA still was far more generous to them. TPC estimated that 43 percent of the benefit of the TCJA went to those with annual incomes of about $300,000 or more. Less than one-fifth went to low- and middle-income households.
On the merits, McConnell is not wrong about how poorly targeted the relief payments are and how much worse the bigger payments would be. It would have made more sense for Congress to increase the $600 credits to $700 or $800 but limit them to those making, say, $50,000 or less—something it could have done at roughly the same cost.
But the debate never went there. Instead, it became an argument over whether a government check should be $600 or $2,000, making it easy for McConnell and other congressional Republicans to recite their socialism trope.
It seems unlikely they would have used that word to describe a tax cut for the same people.
It is hard to know whether Trump or congressional Democrats were trying to make political statements or if they really wanted Congress to increase the size of the tax credits to $2,000 per person. But if they truly favored bigger payments, they went about it in a remarkably ineffective way.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
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