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April 10, 2004

Kerry: Progressive Tax Credits

Okay, I trashed Kerry's spending cap plan, and then Max Sawicky attacked it.

Anytime Max disagrees with me on anything other than fiscal policy, I worry, but when we say something similar on fiscal policy, I have to amend my position.

Because despite the lousiness of Kerry's spending cap policy, his policies are not "Dwight D. Eisenhower" type politics.

Because the key trick in Kerry's rhetoric is that he opposes new spending, but supports lots and lots of refundable tax credits.

What's a "refundable tax credit"? Money the government gives people that can only be used for purchasing a particular social service, and that is available to every person, regardless of whether they pay income taxes or not.

Sounds a lot like government spending by another name, doesn't it.

And what's on Kerry's list of credits?

  • Health care tax credits for employees of small businesses equal to half the cost of coverage -- which will be through giving such employees access to the existing Congressional Health Care plan.
  • Unemployed workers would receive a tax credit of 75% of the cost of health care coverage.
  • A college tuition tax credit of $4000 of yearly college tuition, assumably on top of existing Pell Grants, which would be a dramatic expansion of access to college for poor and working class families.
  • An "after-school tax credit" so every family can pay for child care until the parents get home from work.

    He also has a number of tax credits for jobs, such as paying the payroll taxes of new hires.

    The loophole here is that Kerry can talk about "freezing spending", while increasing government aid to working families by calling it a "tax cut"-- then paying for it with cuts in "corporate welfare" -- raising taxes on corporations.

    The end result would then be more taxes paid by corporations, more spending on health care, college aid, and child care, and Kerry can declare that he hasn't made any net increases in taxes.

    It's a nice rhetorical trick that I support, and contains some very progressive and large spending increases.

    The official spending cap is still stupid rhetoric, since it feeds into the idea that welfare and other discretitionary spending is the source of the deficit.

    But don't mistake that point for the idea that Kerry's economic policies look anything like GOP policy.

    Posted by Nathan at April 10, 2004 12:08 PM