Conservatives Can't Figure Out What the Earned Income Tax Credit Is

An expanded Earned Income Tax Credit appears to be on the horizon. The President provided a concrete proposal for such a thing yesterday. Paul Ryan's dishonest report on welfare also spared it. And even AEI's Arthur Brooks finished off his weekend concern-trolling over envy by advocating an expansion.

Expanding the EITC is a good thing and we should all hope it happens. It will mean more money for low-income workers and their families, which will result in less insecurity and material deprivation. The argument for such a thing is pretty overwhelming and the only thing that ever really stands in the way of it is right-wing politics that generally oppose doing anything to improve the plight of the poor.

What's great about the EITC, beyond the helping the poor thing, is that people have such a difficult time categorizing it. I suspect its squishy categorization is one of the main reasons the right-wing can be coaxed into supporting it from time to time.

Spending or Tax Reduction?

In actual reality, spending and tax reductions are not metaphysically different things. It's all distributive institutions all the way down. You can convert almost any "spending" program into a "tax cut" program and vice versa. You can even maintain exactly the same system and distribution we have right now, but change around the administration of it such that everyone has a 100% income tax and all of our income is welfare income.

But policy is not entirely driven by reality, so what labels you attach to things really matters, especially to the right-wing. What's funny though is that the right-wing cannot really figure out what the EITC is.

Sometimes, they describe it as a tax reduction. When conservatives like Mitt Romney complain that 47 percent of Americans don't pay federal income taxes, the way they arrive at that number is to count EITC payments as reductions in taxes paid.

At other times, they describe it as government spending. When conservatives try to add up the money the federal government spends on welfare, they include the EITC as a spending program. This allows them to cite a larger dollar figure.

This schizophrenic understanding of the program creates such spectacles as the one that graced the New York Times on Sunday, in which Arthur Brooks simultaneously bemoaned "redistribution" while advocating for an EITC expansion. If the EITC program were implemented as something other than a tax credit (which it easily could be), one suspects it would be classified as precisely the sort of "redistribution" Brooks thinks is so toxic.

Sad State of Politics

Ultimately, I suppose we shouldn't complain too much if good is coming out of it. But there is something troubling about the fact that the viability of good, worthwhile programs is so often dependent upon these kinds of essentially aesthetic considerations. If providing means-tested income boosts to poor people is a good thing, then it should be a good thing no matter what administrative structure is used to accomplish it.

Instead, we find ourselves in a sad political state where the same people can aggressively hate and advocate cutting the food stamp program while advocating an expansion of the EITC, even though the EITC is not meaningfully different from taking the food stamp program, converting it to cash, and embedding it into the tax code. In this sad state, the quality of life for those at the bottom is weirdly dependent upon whether the opaque administrative tinkering that undergirds a given program aesthetically appeals to the animal spirits of our politicians.