ITEP: Tax Cuts for the Rich Will Exacerbate Inequality, Fail to Address Current Economic Crisis
news releaseFollowing is a statement by Amy Hanauer, executive director of the Institute on Taxation and Economic Policy, regarding White House Advisor Larry Kudlow’s statement on priorities for the next economic relief package.
“The White House’s latest economic policy trial balloon leaves out the most important solutions and floats some policies that are diametrically opposed to what the country needs.
“The proposal re-ups tax breaks for the wealthy and fails to laser focus on vulnerable families that need the most help. A capital gains tax cut would reward those who already benefit from preferential rates, with more than three-quarters of largesse from this type of proposal going to the wealthiest 1 percent of Americans. A payroll tax cut does more for those who are paid (and paid more) than for those who’ve lost jobs in this downturn. It would likely send at least two-thirds of benefits to the richest fifth of Americans and about a quarter to the top 1 percent. A third idea—reducing the extra unemployment benefits—would weaken the main boost that experts conclude is keeping the economy afloat.
“Other elements are more reasonable: struggling families indeed need more direct payments, though the amount should be significant and ongoing until the crisis fully abates. Payroll protection program extensions are rightly on the list—these can help small employers keep workers on payroll and make rent—but policymakers must better target payments to businesses run by Black and Hispanic owners who were left out of the first round.
“Missing from the list is much-needed federal funding to state and local governments to keep health care, schools, and local services intact and prevent further layoffs of state and local employees. And given the arbitrary and too-low limit that the White House has placed on the cost, it seems likely that the expensive and unhelpful tax cuts will use up much of the package.
“The economy won’t recover until the health crisis abates. The White House should focus on helping those most harmed and who are most likely to spend quickly, not rewarding the wealthiest.”