#TaxDay

Vox’s Dylan Matthews on Dems’ ambitious new plan to expand the EITC and Child Tax Credit; PLUS: a conversation with an elementary school teacher and mom fighting to strengthen the credits for families like hers. Subscribe to Off-Kilter on iTunes.

Happy tax day!

In honor of what we’ll call Tax Week, Off-Kilter is devoting this week’s entire episode to some of the most exciting developments right now on the tax front… namely, two bills recently introduced in Congress, the American Family Act and the Working Families Tax Relief Act. The pair would dramatically reduce child poverty and boost the incomes of over 100 million Americans by strengthening two key low-income tax credits (that also happen to be acronyms folks who care about poverty all know and love): the EITC and CTC, the Earned Income Tax Credit and the Child Tax Credit.

The bills — which are being championed by Sens. Sherrod Brown (D-OH) and Michael Bennett (D-CO) as well as Reps. Rosa DeLauro (D-CT) and Suzan Delbene (D-WA) — include a range of bold measures to boost workers’ and families’ incomes. But perhaps the most exciting part is they would create the country’s first child allowance, something other developed countries have long had in place.

To unpack what’s in these bills and why it’s such a big deal that they have the support of nearly every Democratic member of Congress, Rebecca sits down with Dylan Matthews, a writer at Vox.com and host of the Future Perfect podcast.

Later in the show, Rebecca speaks with Julie Groce, an Arizona elementary school teacher, mother, and MomsRising advocate who’s fighting to strengthen the credits for families like hers.

This week’s guests:

• Dylan Matthews, writer at Vox and host of the Future Perfect podcast
• Julie Groce, Arizona elementary teacher and MomsRising advocate

For more on this week’s topics:

• Read more from Dylan for Vox.com on the American Family Act and the Working Families Tax Relief Act (and follow him on Twitter for lots more grade-A wonkery)
• Check out this op-ed by Rep. Rosa DeLauro and Neera Tanden on why we need a Young Child Tax Credit

This week’s transcript:

REBECCA VALLAS (HOST): Welcome to Off Kilter, the show about poverty, inequality, and everything they intersect with powered by the Center for American Progress Action Fund. I’m Rebecca Vallas. Happy Tax Day! In honor of what we’ll make into tax week, we’re devoting this entire episode to some of the most exciting developments right now on the tax fronts in Congress. Namely that’s two bills recently introduced that’s the American Families Act and the Working Families Tax Relief Act that together would cut child poverty nearly in half and boost the incomes of over 100 million Americans. All by strengthening two key low income tax credits that also happen to be acronyms that folks who care about poverty know and love, that’s of course the EITC and the CTC, the Earned Income Tax Credit and the Child Tax Credit. These two bills are being championed by Ohio Senator Sherrod Brown and Colorado Senator Michael Bennett as well as Connecticut Congresswoman Rosa DeLauro and Washington state Congresswoman Suzan DelBene. They include a range of bold measures to boost workers’ and families’ incomes but perhaps more exciting in these bills is the that they would for the first time create a child allowance in the United States, something that lots of other developed countries have long had in place. to unpack what these bills have in them and why it’s such a big deal that they have the support of nearly every democratic member of congress and the entire Democratic presidential hopeful field, I’m joined by Dylan Matthews, a writer at Vox and host of the Future Perfect podcast. Later in the show I speak with Julie Groce, she’s an elementary school teacher in Arizona and a mother of one as well as a MomsRising advocate who is fighting to increase the tax credits and spoke last week at one of the press conferences at the bill introduction.

But first Dylan Matthews, Dylan so great to have you back on the show.

DYLAND MATTHEWS: Glad to be here.

VALLAS: So you are perhaps in the running for wonk in chief in my opinion, but that’s nowhere truer, and there’s a lots of spaces where you wonk out with the best of them but that is perhaps nowhere truer than in low income tax credits space, the EITC and the Child Tax Credit and you’ve had no shortage of opportunities to do a lot of thinking and writing about these tax credits in the past several weeks because of the really exciting bills that have been introduced. So before we get into the legislation and what it would do and who it would help, it feels like we probably need to back up just a little bit and actually do a little bit of a primer on current law because some of this does get pretty wonky, warning, wonk warning, that’s coming. And so why don’t you help us with where are thinks now with who can get the EITC, who can get the child tax credit, and some of the shortcomings in those policies that are probably where we should start before we talk about why these bills would address them.

MATTHEWS: Sure and I should add some of these details have changed sine the Trump tax bill and we can get into the ways in which Trump adjusted things, some of which helped but not as much as they could have. The basic lay of the land is that the Earned Income Tax Credit is the bigger of the two, it is very limited for people who don’t have children, I think the maximum benefit is under a thousand dollars but for families with kids it can be a really substantial, into the many thousands of dollars benefit for low income families. It phases in with earnings, it starts at the first dollar you earn, the phase in rate depends on how many kids you have but I believe if you have two kids it’s about 40 percent. So you get 40 cents for every dollar you make added, it pays out with your tax return, it’s part of your tax refund and so it serves as this big influx, this big lump sum of three or four or five thousand dollars for low income families that can really help in the early part of the year and help build a savings next egg and supplement income for people in minimum wage or near minimum wage jobs.

So that’s the bigger piece, the Child Tax Credit has had an odd history, it started very small under the Clinton administration, got expanded a bit under Bush, got expanded a lot under Obama and it is currently pegged at $2,000 per child but your access to that is limited in a similar phase in way. So people with earnings under $2,500 can’t get it at all, there’s a hard floor there which the Earned Income Tax Credit doesn’t have. And then above that, you’re limited to i believe it’s 15 percent of your earnings above that and that it maxes out at $1,400 for poor families, which is less than richer families, which pay income taxes can get from it.

VALLAS: It’s almost unfair to have you do this without a white board but hopefully people are picturing trapezoids and other shapes.

MATTHEWS: It’s a hard thing to express through audio but the short version is these are work credits, they’re credits that phase in with work, they’re supposed to pay more the more you work, they’re very purposely not designed to give benefits to people who don’t work and that’s part of the appeal, especially to some Republicans who have been boosters of these credits but it does leave out a segment of the population that might be involuntarily unemployed, that might be disabled but lack access to disability benefits, might be elderly and so for a while there have been conversations about how do we shift these programs so that we do have a safety net for people and especially for children who are in that situation, who have caregivers who don’t or can’t work and are deprived because of that and cut out of the safety net.

VALLAS: So these two programs are often hailed as some of the most powerful anti-poverty programs in the country because of how many families and how many individuals they actually protect from poverty every year, they’re also a huge moment in the year for low-income families because of how many families who are struggling to make ends meet actually get huge portions, like a third of their income at tax time because this comes as a lump sum refund, so that’s another feature of these bills that worth actually naming is that you get, it’s another feature of these policies that exist in current law that’s also potentially a shortcoming, you have to wait until tax time to get what can be a sizable influx of your annual income.

MATTHEWS: Absolutely and this is is something that I know you and your colleagues at CAP have written a lot about and it’s a blessing and a curse. There have been ethnographies by sociologists going into low income communities, asking about their experience with the Earned Income Tax Credit, Kathy Edin at Princeton has done this work and one thing people always say is I love having a reason to save, I love getting this influx of money, being able to put it in a savings account or set something aside for retirement, set aside a down payment for a house, it can be a really powerful savings mechanism but on the other hand these are also communities that get targeted a lot by payday lenders, by really usurious interest rates and because you get it all at once, low income families are sometimes in this situation where they have to take out loans to pay for things that they could have paid for if the credits were paid out every month or something like that.

VALLAS: And the timing is not the only shortcoming. You started to talk about this important linkage to work that is pretty restrictive in terms of who can actually qualify but there are actually a lot of things about the credits, powerful as they are, important as they are in so many people’s lives that make them not quite as strong as they could be when it comes to anti-poverty programs. What are some of the shortcomings in both the EITC and the Child Tax Credit apart from timing?

MATTHEWS: So there’s the timing issue, the biggest thing for the Child Tax Credit is how it phases in and the earnings threshold that you have to earn above a certain amount and that you have to keep earning above that amount to get the maximum credit. The Earned Income Tax Credit phases in faster but it has the same issue, if you’re not working in a wage occupation, if you’re a stay at home caretaker, if you volunteer but don’t get a wage you’re left out of it. That’s a purposeful design decision, there are people who would say that’s a feature not a bug. But if you’re trying to reach certain segments of the population it’s a limit. I’d say the other thing that’s related to timing, because you get it through the tax code you have to go through the tax preparation process. And the IRS has a program VITA, that does volunteer income tax preparation for people in low income communities, primarily to help them get EITC and CTC. But it also means that this is a business opportunity for some really predatory tax preparation companies that take a huge chuck of these returns from their clients and so there’s the access piece, which is a little more complicated than it could be and it’s something about I think the last number I saw was 22 percent of people who are eligible for the tax credit don’t get it just because there’s these barriers to getting it from how onerous preparing taxes can be, which I think any of us that are familiar with.

VALLAS: So and the EITC, when we’re talking about who aren’t able to access it because of the way it’s designed, one of the statistics that always knocks me over with a feather but bears repeating is that workers without dependent children, and that’s one of the groups who ends up not being helped substantially by the EITC the way it currently works, workers who don’t have dependent children for tax purposes end up getting, they become the only group that we tax into poverty or in some cases even deeper into poverty because of this gap in the EITC as well.

MATTHEWS: True, and they get dramatically less from it, it’s a much more generous program for people with kids so it’s in many ways a child benefit as well as a work benefit. And I’d say the other thing that can be harmful for people without children and we say people without children but this can also include noncustodial parents, people who pay child support but aren’t the primary caregiver, it can include parents, just not traditional parenting arrangements. But one thing the Earned Income Tax Credit does which we know from a lot of studies is that it encourages people to work and that increases the number of people in the labor market and you would expect under normal circumstances that that would reduce wages. And there have been a few studies finding that that happens to some degree. And for people with children who get really big credits, it’s a set back but it’s not a huge deal because you’re still coming out way ahead because you get the benefit but there are cases where childless workers can come out behind because they see their wages fall because of this and then they get this meager credit to make up for it.

VALLAS: So now with that as the way that the tax credits work in current law we also have to bring in the Trump law, the Trump tax law and what it did. A lot of the coverage around tax day has reminded people that 26 million kids were left behind by some of those improvements. What happened in the Trump tax law to some of these credits?

MATTHEWS: So the big simplification that they were trying to do around families with kids is they got rid of tax exclusions, if you recall before this year’s taxes you could deduct dependents, I think it was $2,000 per dependent, they got rid of that as a deduction and funneled it into doubling the child tax credit for middle class and wealthy people from $1,000 to $2,000, where they left people out was that they decided that not all of that $2,000 would be accessible to poor families. So $1,400 is what’s called refundable, it can go back to you even if you don’t have a positive income tax liability. And so whether or not a credit is refundable is really the important thing for whether or not it does much for families. If you’re in poverty in America you probably don’t have a positive federal income tax bill. And by limiting it to $1,400 that cut off a lot of people, it also preserved an existing earnings threshold, which it existed before, it reduced it slightly to $2,500, which was a very mild improvement but not much and still left out about a third of kids who are in families that don’t benefit, or excuse me, a third of kids who are in families that don’t get the full benefit, don’t earn enough to get the full $2,000.

VALLAS: So they either get left behind or they get not helped all that much.

MATTHEWS: Exactly.

VALLAS: So but on the flip side what the Trump tax law did was also to help out a lot of people who actually were previously too wealthy to get these credits.

MATTHEWS: Exactly, so there’s a phase in but there’s also a phase out and it used to be quite low, I think if you were single you didn’t even have to be making $100 grand for it start phasing out and the Trump bill increased that dramatically. I don’t have the numbers in front of me but I think it’s $250,000.

VALLAS: Yeah and I think like $400,000 for a couple, really really high levels of income.

MATTHEWS: Really high. So it was meant to expand it to the upper middle class while not expanding it much and there were proposals to expand it more. Michael Bennett and Sherrod Brown put forth an amendment that would have dramatically expanded it for poor families, which was a precursor to some of the ideas we’re about to talk about. That got voted down, Marco Rubio and Mike Lee, as much as I disagree with them about basically everything had a much milder bill that while not going far enough in my opinion would have helped somewhat that also got voted down. And we were left with these very, very minor changes for poor families.

VALLAS: In the context of a $2 trillion tax break for really really rich people and wealthy corporations for the most part, just to remind that that’s the broader context.

MATTHEWS: Yes, a lot more spent on lowering corporate tax rates than on helping poor families, like dramatically.

VALLAS: Dramatically so. So OK with that as now the backdrop of OK we’re at present day now, now we’re at a place where we’ve got these two new bills, the American Family Act and the Working Families Tax Relief Act, I have to briefly just say I’m sorry but this just needs to never become an acronym because I just don’t want to have to say WFTRA.

MATTHEWS: WFTRA, yeah, Booker has a new bill that I forget even what the acronym is but there’s a lot of acronyms flying around.

VALLAS: And of course we’re talking about the EITC and the CTC so this is acronym soup at some point. Just acknowledging that, but now we’ve got these new bills, you actually described the American Family Act and I think you’ve said similar things about WFTRA, you actually called it the single most important bill of the 116th Congress for the country’s poorest residents. That’s a really bold statement, especially from someone who writes about a lot of pieces of legislation that come out from Democrats and from Republicans, what makes you say that about these bills?

MATTHEWS: So the American Family Act, which is the initial bill they wrote dramatically expands the Child Tax Credit, it makes it bigger but just as importantly it makes it fully refundable. So whereas you have this earnings phase in right now and you have a minimum income under Michael Bennett and Sherrod Brown’s bill, The American Family Act and I’d be remiss not mentioning Rosa DeLauro and Suzan DelBene who sponsored the House version, every person under the phase out range, every poor American would get at least $3,000 per kid distributed monthly. That is a huge, huge change from the way that this is done now, it makes sure that third of kids who aren’t currently getting maximum benefits do get maximum benefits and then some, it’s even bigger for families with young kids, it’s $3,600 a year or $300 per month. These are really, really dramatic increases for people and really directed at the bottom of the income scale, that you can design tax credits that do a lot for the working poor and the middle class, and many of which I think are good ideas. But this is what a plan that is really meant to be targeting people at the bottom of the income scale looks like. And I hadn’t seen anything like that from Democrats in other areas of policy. Poverty policy as you know well sometimes gets shrift next to sexier priorities, which are also important. I haven’t seen a plan this mainstream within the party with this much backing that would do this much to reduce poverty in the United States, especially among children.

VALLAS: And you’re just naming one provision that actually takes it to that place of being so incredibly dramatic, this is one of those but wait there’s more moments, you described the full full refundability and the massive increase in the amount of the child tax credit. It’s also a big plus up for families who have young kids.

MATTHEWS: Absolutely, so the base credit is $3,000, which is a 50% increase over the maximum now. But the bill would also add an additional $600 per kid for young kids, kids six and under, five and under excuse me, under six. And there are a number of reasons for that. We have a research literature suggesting that investing in young kids can pay off a lot that is where a lot of learning happens, where a lot of environmental factors can be really powerful and there was just a study I saw the other day about low birth rates being predictive of really dramatic decreases in lifetime income, things like that can be avoided if a family has more resources. So it’s important for those reasons but also just as a matter of near term dollars and cents, as any parent would tell you, it’s really expensive in the early years. You have to buy all these diapers, you have to buy new clothes every three weeks or something.

VALLAS: I’ve heard, neither of us have personal experiences with this.

MATTHEWS: Neither of us is a parent, it sounds really hard.

VALLAS: It sounds really hard and expensive.

MATTHEWS: And also I was talking to a friend who was saying he’s looking forward to a kid being four or five because then daycare is less expensive, they charge you more and the kids are really young and harder to deal with but it’s also you’re earlier in your career, you probably are making less money you’re going to be making when the kid is four or five so there’s also a financial rationale for the credit giving more resources to the people at that stage of parenting where you need to be spending a lot more and plussing them up then.

VALLAS: There’s EITC provisions that we’ll get into in a minute but there’s so much really, really rich research literature telling us why it is so important to be boosting income in these early years of life that I want to stay there for just a minute. It’s obvious that it’s expensive to raise kids and so people probably listening and nodding along and going yeah, uh huh, it’s really expensive. But we also have this tremendous research literature telling us about the value of giving families cash. People might be listening and going yeah, there’s a lot of really important programs out there like food stamps, which is also called the Supplemental Nutrition Assistance Program or SNAP or maybe housing assistance or Medicaid and all of these are really important programs but what we’re talking about here within the context of these low income tax credits is cash, something that these other programs that are in kind don’t provide. Tell us a little bit about what we know about why it matters to give families cash.

MATTHEWS: Sure and part of why it matters is all those other things, when you have more access to cash you have, you’re able to provide better health care, you’re able to afford child care and educational enrichment and things for your kids but some of it is just, it’s traumatic to be living in high crime, high poverty neighborhoods and having more cash makes it easier to move out of them. Having cash allows you to afford more nutritious food for your kids and helps them that way, prevent low baby weight, just a lot of, and it also reduces your stress as a parent which might effect the environment that the kids grows up in ways that are hard to predict but seem to bear fruit decades later. One of my favorite studies on this is about a program I actually hadn’t even heard of before called the Mothers’ Pension Program.

VALLAS: And I will confess I hadn’t heard of it before I read your piece either, I’m sharing in the embarrassment for having only learned about this recently because it’s really cool.

MATTHEWS: It’s really cool and if anyone’s interested, [INAUDIBLE] has an entire book on this but it was passed in the wake of World War One, widows with children coming out of World War One and you also had the Spanish flu which also is a, we don’t talk about a lot but killed millions and millions of people and also left a lot of widows so the idea was to provide a pension for mothers so they could stay home and take care of kids. This was before women in the workforce was a super widespread thing, especially in white collar jobs and so they set up this program in the ’20s and because kids who were raised in the ’20s are now elderly some researchers were able to go back and see what the differences in kids who got these checks were versus kids who didn’t and they actually found that it extended lifespans by about a year to be getting these cash benefits, dramatically increased your income, reduced the occurrence of a number of health programs, very big effects. And it’s cool because you’re able to see it over the whole life scale. Now we’re not going to be able to see the effects of the EITC right now until 2100, obviously another time scale.

VALLAS: I’ll have you back, don’t worry.

MATTHEWS: Sure, when we’re fully holograms.

VALLAS: I figure there will be a way I just don’t know what it is yet.

MATTHEWS: There will be podcasts in the future, I’m sure of it.

[LAUGHTER]

VALLAS: You say as someone who also hosts a podcast, but sorry continue.

MATTHEWS: Somewhere in the 1850s someone was like we’ll be writing dispatches like this on telegrams for for the rest of our lives.

VALLAS: It was a better time in some ways but that’s a different show.

MATTHEWS: This is a tangent, but yes, so that’s a very cool study but there are lots of others as well. The Eastern Band Cherokee tribe in North Carolina had some revenues, I forget if it was casino revenues or natural resource revenues but they decided to refund them to members of the tribe as straight cash payments, saw major developmental improvements, reductions in truancy, teen crime, general getting into trouble among kids whose families got these payments afterwards. I can just go on and on. There’s many studies like this but the research literature is growing and coming to a very cohesive conclusion which is if the outcome is test scores or graduation rates or health or income for kids as adults it’s hard to find something that doesn’t have at least some effect in the research literature from giving kids cash early on.

VALLAS: And for anyone who’s listening and saying yeah but we’re not actually talking about huge sums of money here, we’re talking about say $3,000 a year, there’s actually research that looks at exactly that amount and says what happens to kids later on and that research comes to us from Greg Duncan who’s an economist at UC Irvine and actually tells us that a $3,000 annual income increase, small as that might sound for families that are living below the poverty is associated with somewhere between a 17 and 19% increase in adult earnings for those kids when they grow up. So hugely impactful longterm positive outcomes even just what sound like small amounts of money.

MATTHEWS: Right exactly and the Mothers’ Pension benefits were also quite small. This was in the very early days of the American welfare state, we barely had an income tax, they were not paying out large sums of money but you still saw these really big effects and I think it all points to this conclusion that beginning of life is important and having more access to material resources for your kids early on can have major long term effects.

VALLAS: Now as we’re talking about this I want to go back to something you brought up before and go down a different rabbit hole for a second which is you said that this is a big deal for the United States to be having this conversation. But that’s because we’re actually not doing the thing that lots of other developed countries have been doing for a long time which is to have a policy on the books, which is well established in lots of other developed countries called a child allowance, which is actually where these bills take us by decoupling the credit from that minimum earnings threshold like you were describing so tell us a little bit about what child allowances look like in other countries.

MATTHEWS: Sure and I would add that a lot of what we know about the effects of giving people cash come from these programs. I think it’s pretty well known, especially among people of a center left tilt that the US is alone in industrialized countries in not having universal health care and I think this is something to add to the list. A child benefit is something that most rich countries do that we just happen not to do. So a child benefit is typically paid out regularly, monthly and is the range of thousands of dollars per child every year delivered to the parent by the government no strings attached. Some places have phase outs for wealthy parents, Canada does, some are truly universal, kindergeld, which is Germany’s delightfully titled program which I think is literally “child money”

VALLAS: I think that is how that translates.

MATTHEWS: I believe it’s truly universal. And they can get very, very large. I believe Canada’s benefit for older kids, they also have a benefit for young kids is about $5,000 per child so way bigger than even this bill that we’re talking about. And that was a major policy initiative of the Trudeau administration, they’d already had a benefit but they increased it a lot and numbers recently came in and child poverty in Canada fell by a third. Tony Blair, when he was Prime Minister of the UK he and Gordon Brown his head money guy set up a number of programs to reduce child poverty, the biggest of which was making child allowance universal and greatly expanding it. And over the next few years child poverty fell by about half in the UK while it stagnated in the United States under George W Bush. So we have this natural experiment of what happens when a government adopts this and you see this substantial drop.

VALLAS: So when you give families money they get less poor. That’s what you’re telling me.

MATTHEWS: It’s an amazing conclusion and is tautological in certain ways. I think it’s important to remember this in the context of some of the arguments we hear about poverty that you have conservative politicians in states like Arkansas and Kentucky arguing for hard work requirements on things like food stamps and Medicaid and the idea there is if you give people money they’re going to work less and they’re actually going to be poorer. If you take conservative rhetoric on this at its word the argument is that they are worse off in material terms because you are discouraging people from working. And I think the clear conclusion of this literature is that’s not true. If anything Canada’s child benefit appears to increase work by mothers especially which you would expect, you have money for child care. And so those calamitous outcomes that they predict just don’t come to pass.

VALLAS: And also people are less poor which itself is a really huge benefit and comes with all kinds of down the river savings, right?

MATTHEWS: Exactly yes, it reduces poverty in the now and it reduces all manners of other problems in the medium to long term.

VALLAS: And that’s actually not a hypothetical. There was a huge study, we’ve talked about it a couple of times on this show in glancing ways but it is so central to the argument behind these policies that I feel like it’s worth bringing in and it’s actually part of some of the writing you’ve been doing around these bills because of that nexus. Huge study at the National Academy of Sciences looking at how do we cut child poverty in half in the next decade? And it was actually commissioned by members of congress including Congresswoman Barbara Lee who is one of the leaders in the House Democratic caucus when it comes to cutting poverty and has been for a long time. So now we’ve got this study and it actually tells us a lot, not just about to cut child poverty, it actually includes for a call for basically exactly what we’re seeing in these bills, surprise, surprise, but it also tells us a lot about how expensive child poverty is.

MATTHEWS: Yeah, there have been a number of attempts to quantify how expensive child poverty is in terms of all of the social costs that we bear because of that. So increased disease and illness and early death, increased crime, decreased earnings because you get an inferior education and can’t take your career to the level that it otherwise would have been. And so there was a paper in the mid 2000s that was the first I saw to try to quantify this and the author of that paper was on the National Academy of Sciences’ board and did a similar effort there. And I don’t know if you have the number in front of you but I believe it’s about $600 billion per year.

VALLAS: Somewhere between 600 and 700 yeah.

MATTHEWS: These numbers when they get into the hundreds of billions can start to feel very abstract but that’s a few point of our GDP, it’s a real share of the country’s resources and income that’s being lost because of this entirely preventable condition that setting up programs like child allowances can reduce if not eliminate. So I think that was one of the more powerful things in the study because the conclusion is we can’t afford not to do this. We talk a lot about paying for these programs and that’s important and things are having sustainable taxes are important but we’re also paying for not having them right now and there are these long term costs that we’re going to be reducing by investing in kids.

VALLAS: One of the things that frustrated me the most around that study came out was a lot of the headlines were so the wrong take. And they were well intentioned headlines but headlines saying we could cut child poverty in half but it would be really expensive and it’s like I’d say the better headline would be really expensive right now to let child poverty be at these really ridiculously high levels be a lot cheaper if we just ended it, let alone I should say the other way around, it would be a lot cheaper if cut it in half or even just ended it.

MATTHEWS: Exactly and I think part of the problem is just how short term our political institutions are. If you’re a member of congress you need to get reelected you can’t wait for thirty or forty years to see how your programs are reducing poverty and improving people’s lives. But that really matters and I think the best part of the study was taking that long term perspective.

VALLAS: So let’s move over to the EITC because we are massive neglecting it we are focusing on the other acronym so headed over to the Earned Income Tax Credit, there are really exciting provisions within the Working Families Tax Relief Act that would also address a lot of the shortcomings that you talked about before in the EITC and really, really boosted up in pretty significant ways. One of those is a huge increase for workers who are not caring for dependent children.

MATTHEWS: Exactly so it about doubles the maximum benefit for workers without children, it also expands which of them can get the credit. Currently if you don’t have kids you have to have a minimum age of 25 to get the Earned Income Tax Credit, which sounds arbitrary and is arbitrary and it phases out I believe at 64 I believe is the oldest you can be to get it and the bill lowers the minimum age to 18, raises the maximum age to 67 and so expanding which childless people can get the benefit and also doubling how much benefit they get out of it. So a substantial expansion and there are also expansions for people with kids, which I think we can get into next.

VALLAS: We should get into right now.

MATTHEWS: Oh sure, sorry for the odd transition but also smaller increases, more like a quarter to a third increase in the maximum benefit for families with one kids or three plus kids so it’s an across the board increase but it’s concentrated among those who have been traditionally left out of the credit.

VALLAS: So huge improvements there as well. It also has, as you mentioned before that $500 advance, which I care a lot about because it was actually an idea that like the Young Child Tax Credit, the other idea I get really excited about, these were ideas that came out of CAP originally. but that $500 advance on the EITC which as you mentioned might not sound like a lot of money but guess what the average pay day loan is $375 so it’s not huge sums of money that are actually causing folks who don’t have anything in the bank and we know that’s about four in ten Americans possibly more at this point, pushing them heading over to pay day lenders and ending up in a cycle of debt that they can be stuck in for in some cases years if not a lot longer than that, all because of what started as a pretty small, unexpected expense.

MATTHEWS: Right and I would add to that that there was a recent study that sort of went viral asking, it was a survey asking Americans if they thought they could handle $400 surprise payment and a huge share of Americans said that they couldn’t. That again doesn’t sound like a lot of money but if your fridge breaks or your car breaks down or your kid chips a tooth, there are a lot of things in life that can cause these surprise expenses and this is a way for people who are eligible for the EITC to get an emergency injection of cash in those situations that they don’t currently have access to except through things like pay day loans.

VALLAS: So really important improvements on the EITC side as well and a lot fo the literature you were talking about really carries over right because we’re also talking about here about cash that’s really important for kids, really important for folks of all ages as we’ve discussed. it’s funny as we’re talking about this to say out loud that you almost can’t talk about the EITC without talking about Paul Ryan who used to be Speaker of the House because he used to be one of the big champions in congress for expanding the Earned Income Tax Credit and it used to sound like a bipartisan idea. Why have the politics changed so significantly and what do you trace that back to?

MATTHEWS: The Paul Ryan journey on this, even as he’s retired from congress of deep frustration for me, he said that he wanted to double the credit for people without children, the Obama administration had proposed doubling it for taxpayers without children before, you would think that there would be agreement on that but Ryan insisted that anything they did with around that be paid for by cuts to the safety net elsewhere. So the Obama administration said yes this is a priority but we’re not going to gut food stamps to pay for this. And so they were at an impasse about that, Mick Mulvaney who is now acting chief of staff but has since the beginning of the Trump administration been in charge of his budgeting and spending welfare state policies is really die hard tea partier. He was one of those people who wanting to default on the debt in 2011 unless they passed a balanced budget amendment and other super extreme conditions, he proposed budget after budget of really dramatic cuts to the safety net programs. The EITC hasn’t been a big focus of his but he’s certainly not interested in doing the Paul Ryan thing of putting a compassionate face on his brand of conservatism. He’s not interested in making those overtures.

VALLAS: It is fascinating that considering both of the credits and especially the Child Tax Credit but also the EITC, they have this history of bipartisan support in large part because they are so, well particularly the Child Tax Credit is so much more universal than a lot of other programs that are more targeted to folks at the bottom but both tax credits have a history of bipartisan support and yet here we ended up with this tax law that was all the things for really, really, rich people and wealthy corporations but they couldn’t even squeeze this in despite the fact that it was the only thing that Obama and Paul Ryan could agree on.

MATTHEWS: And despite a tremendous amount of intellectual effort on the part of conservatives, not behind the EITC, there was that but especially behind expanding the Child Tax Credit, there were many profiles of the reform conservative movement and their big idea was they wanted to support parents and the kinds of conservatives that would support working families and you saw Marco Rubio and Mike Lee try to do a very modest version of that and even that got shot down. So all of this hype about a new kind of conservatism that really didn’t amount to much in the end.

VALLAS: So you’ve got a lot of folks now looking at this package of bills, which is where the Democrats in congress in the wake of that tax law is to say you know what we’re actually going to show you what tax reform really looks like if you’re putting American families first as opposed to millionaires and billionaires and people with multiple yachts, I think there is probably some overlap in that venn diagram and also wealthy corporations. And so here you see this package starting to materialize of the kinds of policies that not just a handful of Democrats are standing up and cheerleading and I think that’s a big part of this story as well, a lot of the names that you actually named like Senator Brown, like Rosa DeLauro, like Senator Bennett, these are not new names in the tax conversation because they have wonking out with folks like you and me and others trying to get these bills right and introducing bill after bill going back several years to strengthen these tax credits. But now here we’re at this place where you’ve got virtually every Democrat in both chambers of congress on these bills as a co-sponsor, not just supporting it, not just saying nice things about it but actually sponsoring the bills and you’ve got basically every presidential hopeful in the Democratic category on the bill or saying nice things about these bills and these credits. Would you say it’s fair to say that what we’re watching right now is basically an audition for what Democrats would do if they had more than just the House in their control?

MATTHEWS: Yes and we have a competition among prominent Democratic senators to see who can come up with the most generous and interesting plans like this. Cory Booker just came out with an interesting bill that would allow you to classify certain kinds of care taking as work, so the EITC would be expanding to people who aren’t in traditional wage earnings occupations but are taking care of a kid or parent, that would count as work for his purposes. Senator Kamala Harris has a bill called the LIFT Act that would double or in some cases more than double the EITC and would make it based on how many earners you have rather than kids to make it a little more like a real credit and less like a child credit grafted onto a work credit so there are a lot interesting ideas floating around. I think the Working Families Tax Relief Bill is interesting because of the sheer amount of consensus, because it has support from everyone like Joe Manchin at the right end of the Senate Democratic caucus over to Bernie Sanders. And it’s not a guarantee, the fact that people cosponsored it, that they would vote for this, if Democrats are next in office I think there’s going to be a lot of conversations about paying for it and offsets and which parts of the Trump tax cuts to roll back in order to pay for Democratic tax package but I’m really optimistic in a way that I wasn’t two years ago that a fully refundable child tax credit is going to be part of the big Democratic tax bill the next time they control all three chambers. That was not a sure thing, that was not a part of the conversation when Obama was president and it is now. And that’s been a really interesting and major shift to observe.

VALLAS: What should people be watching in the weeks and months ahead with these bills and with tax credits generally as we put tax day in the rear view mirror?

MATTHEWS: So I would not hold your breath on Congress doing much under Trump, I think people understand he’s not a super receptive audience for these ideas.

VALLAS: Your diplomacy is outstanding.

MATTHEWS: But I would say that one place to look is the states. That there’s a report that came out today actually from, as we’re recording this from Columbia’s Center on Poverty and Social Policy and ITEP, The Institution on Taxation and Economic Policy looking at how you could do this idea at a state level, how you could fill in the gaps for the federal credit in the states. Gavin Newsom in California has suggested that he might be open to some ideas like this. And there are a lot of other states with progressive leaders where you could imagine this being part of a progressive tax and budget taxes combined with higher top rates on millionaires, modest increases to other taxes and it’s something that scales at different levels of government and so I think it will be interesting to see which governors and which state legislatures decide to take action on this.

VALLAS: So a lot to watch both in congress and in the states and as the 2020 debate continues, Dylan Matthews is a writer at Vox, host of the Future Perfect podcast which we also love over at Off Kilter. And he’s one of as now you understand why the chief nerds about tax credits because he did all of that without notes ladies and gentlemen. Dylan thanks for taking the time to join the show.

MATTHEWS: Thanks so much for having me, it’s been a blast.

VALLAS: Don’t go away, more Off Kilter after the break, talking with Julie Groce, a mother who would be helped by these bills we’ve just been discussing.

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And we’re back, welcome back to Off Kilter the show about poverty, inequality and everything they intersect with, I’m Rebecca Vallas. We’ve been talking about tax credits, a lot of the momentum around strengthening the EITC and the Child Tax Credit we’re in congress as well as to some extent in the states but perhaps no one know more about why it is so important to strengthen the EITC and the CTC than the families who are helped by these policies. So I’m so thrilled to speak with Julie Groce, she’s an elementary school teacher in Arizona and a MomsRising advocate and a mother of one who’s been fighting to improve the Child Tax Credit as well as the EITC and actually spoke at one of the press conferences for one of the bills introduced last week. Julie, thanks so much for taking the time to join the show.

JULIE GROCE: Great, thank you for having me.

VALLAS: Julie just to kick off, you’re an elementary school teacher, tell us a little bit about you and your family.

GROCE: Yes, I am an elementary school teacher out in Tucson, Arizona and my husband, he does something with computers, something in IT, I’m not really quite sure what. But he has an Associate’s degree and he makes more money than I do and I have a Master’s degree so that’s frustrating. But we have a one year old child, his name is Adam and between the health care and the day care for Adam we knew that it was going to be tight but we didn’t really fully understand how tight it would be. With his insurance we couldn’t put him on my insurance plan, we couldn’t put him on Chris’s insurance plan because it would be my entire paycheck, so we looked at the marketplace but even if you go through the marketplace it’s still a lot of money. And then his daycare, for finding quality day care that’s a huge chunk of our income monthly as well. So what some months we have facing either paying his health insurance or paying some of our bills and it’s not because we’re frivolous with our money and throwing it left and right, it’s because what we make doesn’t always cover what we need to cover for bills and for day care. So that’s where we are at in our income right now, being a teacher, it’s not an extravagant lifestyle, that’s for sure.

VALLAS: And so that also a big part of why you’ve become such an advocate for strengthening our low income tax credits, the Earned Income Tax Credit and the Child Tax Credit, which we’ve been talking about a lot on today’s episode. Those are both programs that your family has been helped by is that right?

GROCE: Absolutely yes. So this year with the Earned Income Tax Credit we are actually finally able to purchase a house, with down payment assistance programs and Pima County where we live that we’re taking advantage of and instead of throwing our rent away every month, we’re finally going to start building some equity, that was a huge success for us because of the Earned Income Tax Credit. With the Child Tax Credit we’re able to pay off some of his daycare but not all of it. And I think what I find most frustrating about the situation is that day care and the cost of raising a child has consistently increased, but the tax credit has not so if congress was to increase the tax credit it would help us pay for his insurance premium, it would take care of the entire year and that would put more money in our pocket to offer him classes or do other things that would be nice to do. And I also find very frustrating that as a teacher in order to have a family or have a house I have to be married, and I don’t think that should ever be, I should never have to make that decision. Should I have my career that teaching children and teaching the future of America, should I have that or should I have my own family? I don’t think that should ever be my options but luckily I am married and I have a fantastic supportive husband and we have this beautiful child but there are a lot of other teachers in Arizona who are single, the Earned Income Tax Credit would definitely help them. Or there are families, single military people in especially Arizona with our airport base, the expansion of the Earned Income Tax Credit would help them as well.

VALLAS: Adam you mentioned is one year old which is an incredibly exciting age for a child, it’s also an incredibly expensive age for a child and that’s a big part of why the legislation that you’ve been advocating for includes something called a Young Child Tax Credit which would basically give a boost to families like yours who are caring for kids in those first few years of life. What is it you felt like not being able to necessarily provide for everything you’d want to be giving your son and what would you be doing that you’re not doing today if you had that extra income in the family?

GROCE: I feel extremely fortunate to know that where he goes to day care has come high recommended by the parents that I teach and then also high recommended just within our school community so I find it I am very fortunate that I trust our day care. But if we didn’t go with recommended daycare I understand why parents are nervous when they send their kids to school. Your child is being cared for 8 hours a day, that’s a long time not to be with your kid and you want to make sure that wherever they are that the values that they’re learning in those 8 hours are the same values that you would want to teach your child yourself if you were able to stay home. So I find that I’m very lucky in the fact that I could afford this particular day care.

VALLAS: You’re also an elementary school teacher, which you’ve talked a little bit about from the standpoint of it not paying quite as much even though you have a master’s degree as it should and that’s a big part of why your family is being helped by these kinds of income boosters like these tax credits. But you also as an elementary school teacher see kids in the classroom. Would love to hear you talk a little bit about what you think these kinds of policies could mean for families and for kids who would have more of what they need to be able to have the basics before they go into the classroom every day.

GROCE: Right so you can definitely see a difference between students whose family can afford breakfast and students who can’t afford it. They’re fortunate to have a breakfast program here at this school, not all schools have a breakfast program. So that also you have after school program participation you can tell the students that can afford the after school programs and can be afford to be picked up with a parent that they will either come and pick them up early after a work day or they can go to [INAUDIBLE] basically. All of those opportunities, which are great for growing minds cost us and not every family has that extra money. And I know it doesn’t sound like a lot, but $50 might be your dinner for a week and that’s not fair. A child should not lose out on opportunities to grow their mind to experience new activities and explore the world just because their parents can’t afford it or their parents work really hard and don’t make the money that they’re suppose to be making or their profession, like mine, doesn’t pay adequate amount, that’s not fair and I find it really frustrating too because my son, in the first year his mind is a little sponge and I want him to have every opportunity and soak it all in and really set the foundation for him as he grows older as a student and so I think it’s really important that these tax credits get expanded because it will help my family and other families have those experiences after school that right now are on the chopping block as far as when we budget ourselves for the month.

VALLAS: Have you talked to other families about the kinds of situations they’re facing and what these kinds of policies would mean for them?

GROCE: Yes I have a colleague, she teaches on my team with me, her family is a military family and she was facing the same problem with day care it was well where is day care, where is an affordable good day care and then where is a trusted, affordable, good day care. She was having the same concerns and it’s a long day to be gone, away from your child, taking care of other peoples’ children and I think that this would really help her family out too. Her son is growing out of that daycare age, he’ll be in preschool next year it’s still the fact that there’s thousands of military families here in Arizona particularly in Tucson and this would definitely help them be able to afford quality day care, afford health insurance afford opportunities that every child should be given.

VALLAS: Has your family at any point been in a position where you’ve been hit by a bill or some kind of an unexpected expense that you weren’t able to afford, is that something you guys have had to go through?

GROCE: Yes, yes it has, especially during the summer months when it’s 120 out here and our electricity bill is through the roof sometimes, it will come through and it will be like oh wow, OK well we’re going to pay part of it now and part of it later and part of it is going to be late. Definitely has made those tough decisions on various occasions.

VALLAS: And I ask that because one of the other provisions in these bills that you’ve actually spoken about has been the option of getting $500 from your EITC without having to wait for tax time because those kinds of emergencies don’t always wait for the time of year when people file their taxes. Is that the kind of policy where you have been in a situation where you feel like your family might take advantage of it and if so what was the recovery like?

GROCE: I think I could see us possibly using something like that, mostly now we’re in a position where we’re able to save but I know a lot of other families aren’t able to save money. So right now in those situations we just dip into our savings but I will say that I know, like I said I know, I see it in the classroom, I know other parents don’t have that luxury of being able to save every month and so I think that those kinds of programs where it’s a little more flexible you don’t have to do it at tax season, you can do it any time of the year, I think that not only would lighten the burden and relieve the stress which would then trickle into your family dynamic. So I noticed also as a teacher families that are going through a stressful event or families that are really tight knit and they do talk about finances together with their children, it really does trickle into the classroom which then impedes learning, which it’s a huge trickle effect. If you’re impeding the learning how are you going to do later on in life and going on. So I think this kind of a program would definitely be another added cushion, another added layer of relief that families could benefit from.

VALLAS: In the last couple minutes that I have with you, you spoke as I mentioned at a press conference with the sponsors in congress who are championing this bill and you got to stand up there with them side by side, talking about what this legislation, what was it like meeting Senator Brown and Senator Bennett and Senator Wyden and Senator Durbin and what was it like being up there talking about this legislation in front of the cameras?

GROCE: That was such an amazing experience. It was amazing. Senator Brown and his staff, just incredibly friendly, I couldn’t believe it. He even after the press conference started talking to me about the culture of teaching here in Arizona and my situation with the health care, why am I a teacher and I can afford health care but why is it so expensive to have family health care under my contract. It was nice to be heard and I was telling that to my class in 4th grade. We are learning about the constitution, the three branches of government and how they work. And I was telling them making a phone call or writing a letter, yeah you’re voicing your opinion but this opportunity that I had at the press conference, that I know I was being heard. That was very empowering to me. I also found Senator Wyden and Senator BRown both interested in not only helping American families but also in the education aspect, it just seemed they were interested in my story, in me, especially the fact that you’re a teacher and that shouldn’t be something that’s scoffed at but when you hear teacher and in the same sentence not able to pay bills or teacher and not able to afford every single opportunity for their child, that doesn’t seem like it should be in the same sentence. I also noticed that, I’m going on my soapbox here a little bit, afterwards I was looking at some of the comments on facebook there’s thousands of comments I was just thinking what if everyone was on the same page and concerned about helping each other, how much could we accomplish as a country and I thought that this was such an exciting time to be here to be able to be heard because I think that as we pool our ideas together I think that a lot of what we’re working towards especially with this efforts with the tax expansion I think that it’s working. I found out the next morning, the press conference was Wednesday, Thursday morning, I found out that two more senators signed onto the bill, that proof of it working and I think it’s also that our voices are being heard.

VALLAS: Julie your voice is definitely being heard and I can’t thank you enough for all of your support and your advocacy around this important legislation that would help your family and so many other families. I’ve been speaking with Julie Groce, she is the mother of one year old Adam and one of the advocates out there championing the Working Families Tax Relief Act and the American Family Act. Julie thank you so much for taking the time to join the show.

GROCE: Thank you Rebecca, thank you for having me.

VALLAS: And that does it for this week’s episode of Off Kilter, powered by the Center for American Progress Action Fund. I’m your host, Rebecca Vallas, the show is produced each week by Will Urquhart. Find us on Facebook and Twitter @offkiltershow and you can find us on the airwaves on the Progressive Voices Network and the WeAct Radio Network or anytime as a podcast on iTunes. See you next week.