Category Archives: Taxes

NETWORK Urges Representatives to vote YES on the Build Back Better Act

NETWORK Urges all Members of Congress to vote YES on the Build Back Better Act

Julia Morris
November 4, 2021

Ahead of a vote on the Build Back Better Act (H.R.5376), NETWORK Executive Director Mary J. Novak sent a vote recommendation to the Hill urging Representatives to vote yes. This historic legislation reflects values inherent in Catholic Social Teaching as it embodies love of neighbor, care for vulnerable communities, and care for the earth. As importantly, this transformative bill requires those who have the most to contribute their fair share to advancing the common good.

The Build Back Better Act takes critical and necessary steps toward addressing long-standing injustices by:

  • Cutting childhood poverty in half by providing a permanently refundable Child Tax Credit and ensuring no worker is taxed into poverty by extending the expanded Earned Income Tax Credit.
  • Expanding life-saving health care by closing the Medicaid coverage gap, investing in programs to end the Black maternal health crisis, extending premium tax credits to improve affordability for low-income workers and families, making the Childrens Health Insurance Program permanent, ensuring returning citizens have access to Medicaid, and making medicine more affordable.
  • Expanding Medicaid home care to keep older Americans and people with disabilities in their homes while paying care workers a fair wage.
  • Supporting working families navigate the challenges of raising children and taking care of loved ones when they are sick without risking their economic security by implementing a national paid family and medical leave program.
  •  Providing protections to some of our immigrant sisters and brothers.
  • Ensuring improved access to stable housing by expanding housing choice vouchers and invest in building new affordable housing; at the same time remediating years of deferred maintenance at public housing properties.
  • Closing the digital divide and expanding opportunity by making high-speed internet accessible and affordable for low-income urban and rural communities.

The time to act is now. NETWORK Lobby for Catholic Social Justice urges all elected officials to seize this moment as a critical opportunity to act faithfully and make a once-in-a-generation investment in our families and all communities.

Read NETWORK’s Vote Recommendation on Build Back Better Act (H.R.5376).

The Child Tax Credit is an Important Investment in American Families

The Child Tax Credit is an Important Investment in American Families

Julia Morris
October 28, 2021

The expanded Child Tax Credit is one of the most significant expansions of the social safety net the U.S. has had in decades and provides necessary assistance to millions of middle class families, and families living at or below the poverty line. This safety net expansion is essential. Nine in ten families qualify for the Child Tax Credit, supplementing up to $300 for each child, which played a major role in bolstering families struggling to afford food, clothes, and childcare in the pandemic.

This universally beneficial tax credit is in jeopardy, with Senators Joe Manchin (WV) and Krysten Sinema (AZ) posing major threats to getting these essential funds to children in need despite the major success they’ve seen in their home states.

In September, 86% of West Virginians said the expanded Child Tax Credit made a “huge difference.” In Arizona, poverty rates would decrease by 45% if the Child Tax Credit was expanded.

As it stands now, the credit will only be expanded for one year, and it is not likely to be renewed in Congress again. Our economy is going to need longer than one year to recover — which will leave millions of families without the support they need.

In addition, Senator Manchin wants to impose strict work requirements for this bill. This ignores that wages are as low as they’ve ever been in American history. Putting in a hard days work in the United States is no longer a guarantee that you won’t live in poverty, leaving many parents to work two jobs — meaning they will have to pay for child care, which many can no longer afford. Let’s face it: raising children is work and strong families are the building block of our society.

Speaker Nancy Pelosi and Majority Leader Chuck Schumer are hoping to pass the Build Back Better plan by October 31. These next few days in Congress are critical.

NETWORK needs your support to pass one of the significant investments in our country to date.

Here are a few highlights of this bill:

  • Expansion of the Child Tax Credit
  • Lowering Child Care Costs – necessary as 120,000 children have lost caregivers in the pandemic
  • Lowering Higher Education Costs

All of these bold provisions are necessary to ensure a full economic recovery.  As Pope Francis said, recovery needs to be: “capable of generating new, more inclusive and sustainable solutions to support the real economy… and the universal common good, not a return to an unequal and unsustainable model of economic and social life, where a tiny minority of the world’s population owns half of its wealth.”

A budget is a reflection of our values, but past budgets have too often caused harm by underinvesting in our people and our communities. We at NETWORK know this from meeting and listening to families across the country who struggle to make ends meet every month or face impossible choices between paying for rent or paying for medicine.

Now is the time to show Congress your support; this is the final push we will need to get this passed.

You can write an email to tell your Senator to support Build Back Better here.

Or if you are a constituent of Sen. Sinema or Sen. Manchin, you can call them at 1-888-436-6478, to show your support for the bill.

Five Key Tax Reforms Needed to Build Back Better

Five Key Tax Reforms Needed to Build Back Better

Audrey Carroll
September 9, 2021

Right now, Congress is beginning markups of the Build Back Better bill. This recovery package offers once-in-a generation opportunities to invest in our families and communities and achieve the common good. We can fully finance critical policies that prioritize the needs of Black, Brown, AAPI, and Native American families and communities if the ultra-wealthy and tax-dodging corporations pay their fair share.

 

The Build Back Better Plan will be paid for by raising taxes on corporations and those earning over $400,000/year. Congress must responsibly finance a recovery package by reforming our federal tax code. Here are NETWORK’s key tax reform priorities for a faithful recovery in the Build Back Better plan:

Raise the corporate tax rate to at least 28%.

The 2017 Trump tax law cut the corporate tax rate from its long-standing level of 35% all the way down to 21%, far below what corporations had ever lobbied for. Raising it back to 28% will raise nearly $900 billion, enabling us to better invest in our families and communities.

Curb offshore corporate tax dodging.

The current tax code encourages corporations to outsource jobs and shift profits to tax havens because it taxes the foreign profits of U.S. firms at about half the domestic rate. The Build Back Better plan’s proposed reforms will take a big step to curb offshoring, raising more than $1 trillion, by doubling the tax rate on offshore profits and implementing reforms to stop shifting profits offshore to tax havens.

Tax wealth like work.

For people earning more than $1 million a year (the richest 0.3% of taxpayers), the plan will close the loophole that lets them pay a tax rate on the sale of stock and other assets that is almost half the top rate that workers pay on wages — 20% rather than the current 37%.

The plan also will close a loophole (called “stepped-up basis”) that lets millionaires and billionaires go their entire lives without having to pay federal taxes on most of their income or wealth. Taken together, these two loopholes allow billionaire Amazon chief Jeff Bezos to pay a tax rate similar to a public school teacher.

Restore the top individual tax rate.

The Build Back Better plan will restore the top individual rate to 39.6%, its rate before the Trump tax cuts. No one earning less than $400,000 a year will pay more tax.

Crack down on tax evasion by the wealthy.

Years of deep cuts to the IRS that resulted in much weaker tax enforcement of the wealthy and corporations must be reversed. The Build Back Better plan will invest in strengthening IRS enforcement and information technology and increase reporting of income to catch wealthy tax cheats.

An underfunded IRS focuses its audits on the regular taxpayers who can’t afford to fight back with expensive tax lawyers; an underfunded IRS also can’t offer robust customer support when regular taxpayers have questions or problems. A fully funded IRS has the resources to assist regular taxpayers with live customer support services while going after the biggest tax cheats.

Our communities need public investment in housing, paid family and medical leave, health care, and broadband technology that is racially, economically, and environmentally just. By reforming our tax code, we can afford much needed social programs that will help all people and families thrive.

A Catholic Argument for CTC Expansion: Combatting “Anti-Work” Rhetoric

A Catholic Argument for CTC Expansion: Combatting “Anti-Work” Rhetoric

Allison Baroni
August 23, 2021

On July 14, Senator Marco Rubio released a statement denouncing the recent expansion of the Child Tax Credit. In it, he states that while he has always supported CTC expansion for “hardworking families” the recent expansion “has transformed the pro-worker, pro-family Child Tax Credit into an anti-work welfare check.” This echoes rhetoric deployed during the 1990s welfare reform movement, which culminated in the controversial 1996 Personal Responsibility and Work Reconciliation Act. Presented as an attempt reduce poverty while cutting costs, the bipartisan legislation has had devastating consequences for many of those experiencing deep poverty in the United States. By deploying this language now, Rubio reveals the continued insistence of some members of Congress to lean on self-righteous and inaccurate depictions of poverty to pass a self-serving agenda that perpetuates injustice.

A Long GOP Tradition of Putting Profit over People

Republican critiques of Democratic programs and policies as being “anti-work” are nothing new. Following in the wake of President Regan, an increasing number of politicians and constituents expressed concern for the number of people receiving money from the Aid to Families with Dependent Children (AFDC) program, as well as the aspects of the program that encouraged people to remain on the funding rather than finding a job. Dylan Matthews did an excellent deep dive into the complexities of this issue (as well as the results of the 1996 “reform”) but suffice it to say that there were issues with the program. Many who received the aid wanted to work, but to do so would cost them more financially than to remain on it. This stemmed from the program’s sexist and racist roots: FDR created the AFDC during the Great Depression to support single, white mothers, ensuring they did not have to work. The program was designed to disincentivize work to uphold white male assumptions of white womanhood. Rather than take an antiracist and feminist approach to reforming the AFDC, ensuring that all people had the financial ability to get a job should they want one, politicians simply linked access to government support to work status, and left the rest to the markets.

This had devastating results. While at first the program, cast as an attempt at poverty reduction, appeared to succeed, recent data tells a significantly different story. Additionally, in a study done of data from a 2012 Survey of Income and Program participation, University of Michigan’s Luke Shaefer and Johns Hopkins Kathryn Edin found that “‘the percentage growth in extreme poverty over our study period was greatest among vulnerable groups who were most likely to be impacted by the 1996 welfare reform,[1]’” and “households headed by single women saw a larger increase in extreme poverty. Households with children (the only ones eligible for AFDC) saw an increase more than twice as large as the one households without children experienced.[2]” In other words, those most in need were left without government support, and children were the most directly impacted. NETWORK also conducted several studies over the years looking at the harmful impact of these reforms.  

Our Faith Calls Us to Alleviate Poverty

This did not need to happen. Pope Francis once said, “the marketplace, by itself, cannot resolve every problem, however much we are asked to believe this dogma of neoliberal faith” (Fratelli Tutti 168). Very few people want to hear that, but if Senator Rubio’s words are any indication, we all need to. And as usual, our faith traditions have something to offer us as we look for direction. For Catholics such as myself and Senator Rubio, the Pope gives us a clear message: we cannot afford to turn the marketplace, turn work and productivity, into a false god. Not only for the sake of our country, but for the sake of our souls. If we want to be faithful to our tradition, if we want to alleviate poverty, we must do better. Our politics must do better. To quote again from the Pope:

“Here I would once more observe that ‘politics must not be subject to the economy, nor should the economy be subject to the dictates of an efficiency-driven paradigm of technocracy’ [158]…instead, ‘what is needed is a politics which is far-sighted and capable of a new, integral and interdisciplinary approach to handling the different aspects of the crisis’ [160]. In other words, a ‘healthy politics…capable of reforming and coordinating institutions, promoting best practices and overcoming undue pressure and bureaucratic inertia’ [161]. We cannot expect economics to do this, nor can we allow economics to take over the real power of the state” (Fratelli Tutti 177).

The Courage to Act for the Common Good

In our world, living such a political agenda would take great courage, a virtue in the Catholic tradition that Fr. Bryan Massingale has suggested is “perhaps the least studied of the virtues.” Yet, “Thomas Aquinas taught us that courage is the precondition of all virtue. Without courage, we’re not able to be prudent. We’re not able to be just, because courage is the virtue that allows us to surmount the fear that comes with following the Gospel.[3]”

Our nation deserves politicians with courage. We deserve a society build on courage. As Catholics, we too often praise the courage of those who came before us but forget that God extends to us the same grace he did to them. If we allow the Spirit to move us, we can be as courageous as St. Mary Magdalene or St. Peter, as Dorothy Day or St. Oscar Romero. We can be courageous enough to let go of our false gods and build a new world, to reject rhetoric that encourages us to turn a blind eye to the suffering of others.

For this is what happens when we are encouraged to place limits upon who is deserving of financial assistance. Perhaps the most insidious belief behind attacks on the CTC, behind demands that it only be given to “hardworking families,” is that it places preconditions on the right to have one’s basic needs met. Catholics in Congress need to remember that this is not what our faith teaches us, for not only does “every human being has the right to live with dignity and to develop integrally,” but “people have this right even if they are unproductive…” (Fratelli Tutti 107).

[1] https://www.vox.com/2016/6/20/11789988/clintons-welfare-reform

[2] https://www.vox.com/2016/6/20/11789988/clintons-welfare-reform

[3] https://www.commonwealmagazine.org/worship-false-god

New Tool: Build Your Own Budget

New Tool: Build Your Own Budget

Sr. Emily TeKolste, SP
August 11, 2021

Our tax code and our federal budget are moral decisions with ramifications for our families and communities. Right now, the recovery package Democrats are working to pass through budget reconciliation process will make bold investments in a more just future. We can afford this by reforming our tax code to ensure that the wealthiest people and big corporations pay their fair share of taxes.

A more just tax policy not only creates a more equal society, which is better for everyone (even the wealthiest among us), it also ensures we have the revenue we need to make bold investments in a more equitable and hope-filled future where everyone can thrive.

During the second part of NETWORK’s new “Tax Justice for All” workshop, participants re-envision a tax code that makes the wealthiest people and corporations pay their fair share. After setting tax policy, participants use those federal funds to invest in the common good.

Now it’s your turn. Choose your own tax and spending policies with our tax justice calculator. Select the Tax Policies you would implement in the left column and your Spending Policies on the right, then scroll down to the bottom of the page to find a chart that reflects your total revenue and total spending.

BYOB: Build Your Own Budget with NETWORK

If you haven’t attended Tax Justice for All: Unveiling the Racial Inequity of the U.S. Tax Code, NETWORK’s new two-hour workshop looking at the U.S. tax code and economic inequality, be sure to sign up for an upcoming workshop:

Passing a Faithful Recovery Package to Build Anew

Passing a Faithful Recovery Package to Build Anew

Allison Baroni
August 4, 2021

On July 13, 2021, the Senate announced that it had reached an agreement on a $3.5 trillion recovery package to be passed through the budget reconciliation process. This package, which is based on President Biden’s Build Back Better vision, together with the $1 trillion bipartisan Infrastructure Investment and Jobs Act, comes at a time when the COVID-19 pandemic has laid bare the gross inequity and lack of federal investment in our communities and infrastructure.

Congress has a responsibility to meet the moment, respond to the needs and demands of the people, and make a once in a generation investment in our public infrastructure. To do so, Congress must include the following priorities in a bold, faithful recovery package:  

  • Ensure any national paid family and medical leave program has progressive wage replacement, job guarantees and anti-retaliation language, inclusive definitions of family, and centers women of color in all decisions to ensure racially equitable access.  
  • Make the new Child Tax Credit and Earned Income Tax Credit expansions permanent and ensure all immigrants, regardless of legal status, can access the Child Tax Credit and human needs programs.  
  • Establish a pathway to citizenship for all undocumented immigrants including Dreamers, Temporary Protected Status (TPS) holders, and essential workers.  
  • Enact a set of federal standards for Unemployment Insurance (UI) including mandatory 26 weeks of benefits, adequate replacement wage levels (i.e. 75% of wages up to 2/3 of the state’s average wage), and ensure that unemployed workers’ access to benefits is racially equitable. 
  • Provide resources for multi-year rental assistance and address the ongoing unmet need for affordable housing by building affordable housing units. 
  • Make the broadband subsidy permanent to increase access to health care and other critical needs in communities across the country. 
  • Close the Medicaid coverage gap for non-expansion states and provide Medicaid to people who are incarcerated. Finance health expansions by allowing Medicare to negotiate drug prices. 

As always, we will hear critiques that these priorities are too costly. Yet the human cost of not making these needed policy changes is far higher than $3.5 trillion could ever be. Far from a simple policy decision, the choice to include or reject these policy priorities has far-reaching consequences for the lived experiences of those in the United States. For every refusal to include these policy priorities, families in the U.S. face dire circumstances and decisions. 

 Behind all the political rhetoric, lies a simple and important question that we as a nation must answer: who are we beholden too? In Pope Francis’s most recent encyclical, Fratelli Tutti, he reminds us of the answer to that question. Reflecting on the story of Cain and Abel, he writes:  

“Cain kills his brother Abel and then hears God ask: ‘Where is your brother Abel?’ (Genesis 4:9). His answer is one that we ourselves too often give: ‘Am I my brother’s keeper?’ (ibid). By the very question he asks, God leaves no room for an appeal to determinism or fatalism as a justification for our own indifference. Instead, he encourages us to create a different culture, in which we resolve our conflicts and care for one another.” (57)   

We are at a tipping point. As our nation races toward devastating income inequality, inadequate access to health care, and a dearth of quality affordable housing and living-wage jobs, the breadth and depth of the policy response necessary can at times seem daunting. It can be all too easy for us to turn away from the task, to absolve ourselves of our responsibility to one another.  

But, as Pope Francis says, if we are to build a culture of care, it must be done. Congress cannot afford to pretend that bold and immediate action is not necessary to improve and protect the lives of everyday people: the neighbor whose home is in danger of flooding, or the one who never had one to begin with. The parent struggling to pay childcare and the relative unable to access health care.  

These everyday struggles are the result of policy choices. The question facing Congress can be reduced to this: Will we choose to be a nation that refuses to take care of its own, one that accepts poverty as inevitable? Or will we challenge that lie, asserting that no cost is too high to take care of each other? If we listen honestly to God’s question to Cain, we will find that there is only one answer! 

 

Allison Baroni is a rising senior at Villanova University where she studies Peace and Justice & Theology. Allison is a member of the NETWORK Government Relations team this summer. 

Recovery Update: Building Anew with a Bold Recovery Package

Recovery Update: Building Anew with a Bold Recovery Package

Laura Peralta-Schulte
July 21, 2021

Right now, Congress is crafting their budget reconciliation proposal. Over the next weeks and months, our elected officials will decide what policy priorities to include and what to leave out.

Budget reconciliation gives us the opportunity to make bold, transformational investments in our families and our communities by:

  • Making the Child Tax Credit and Earned Income Tax Credit permanent
  • Increasing access to health care, eldercare, childcare, education, and broadband
  • Building affordable housing and increasing access to rental assistance
  • Providing a pathway to citizenship for those with DACA, TPS, farmworkers, and other essential workers
  • Establishing a national paid family and medical leave program, and more.

We cannot go back to the status quo of exclusion and inequality. We must build anew with racial and environmental justice at the center. The recovery package Congressional Democrats are working to pass through budget reconciliation will make bold investments in a more just future. We can afford this by reforming our tax code to ensure that the wealthiest people and big corporations pay their fair share of taxes. We urge Congress to unrig the tax code by:

  • Repealing the 2017 Republican corporate tax cuts
  • Strengthening IRS enforcement to prevent tax evasion
  • Eliminating tax breaks that encourage offshoring
  • Closing tax loopholes used by big corporations to avoid paying their fair share, and more.

Fixing our tax code is essential to closing the racial wealth gap and creating an economy that benefits all of us.

Celebrating Child Tax Credit Awareness Day

Celebrating Child Tax Credit Awareness Day

Colleen Ross
June 21, 2021
Expanded CTC cartoon 3_unbranded

Monday, June 21, 2021 is Child Tax Credit Awareness Day, a day to celebrate and spread the word about monthly payments that are starting soon that will support children and families across the country.

The American Rescue Plan, which passed in March 2021, included a historic expansion of the Child Tax Credit in 2021. The law increased the maximum Child Tax Credit from $2,000 to $3,000 per child for children ages 6-17 and from $2,000 to $3,600 for children under six, which can be received via monthly payments, with the exact payment varying by parents’ income. NETWORK has long advocated for this policy that uses our shared resources to invest in kids, increase racial equity, and support parents and communities.

In July, monthly payments will start going out to families.

With monthly payments, families can count on this support each month to make ends meet. To help with the costs of raising children, families will begin to receive monthly payments of up to $250 for each child 6-17 years old and $300 for each child under age 6. The Child Tax Credit is fully refundable, meaning that if a family’s income tax bill is less than the amount of their Child Tax Credit, they will get a payment for the difference.

According to the Biden administration, the IRS estimates roughly 39 million households — almost 90% of children in the United States — will begin receiving monthly payments without any further action required. Other eligible families — those who have not yet filed taxes in 2019 or 2020 and who did not sign-up for Economic Impact Payments like the $1,400 rescue payments included in the American Rescue Plan — can still sign-up to receive monthly Child Tax Credit payments beginning this summer. Experts project that the expanded Child Tax Credit could potentially help lift one-half of all children out of poverty if all eligible families sign-up to receive the monthly payments.

The Child Tax Credit will not affect families’ Medicaid, SNAP, TANF Cash Assistance, SSI, or other public benefits, and monthly payments will be delivered via direct deposit to the bank account that the IRS has on file or sent to a family’s mailing address on or around the 15th of every month.

Make sure you get your Child Tax Credit payments!

If a family filed tax returns for 2019 or 2020 or signed up to receive a stimulus check from the IRS with the Non-Filer tool last year, they will automatically get the monthly Child Tax Credit. If they aren’t already signed up, it’s not too late to sign up to get the Child Tax Credit here: https://www.whitehouse.gov/child-tax-credit/sign-up/

Let’s make support for children and families permanent!

This one-year expansion of the Child Tax Credit is a massive advancement in ending childhood poverty. We know it is wrong when children and their families are struggling to make ends meet. It’s not good for families and it’s not good for our communities. We must make the expanded Child Tax Credit permanent in the next recovery package that Congress passes.

We are called to build anew by passing tax policies that make the wealthiest people and corporations pay their fair share – doing this allows us to invest in children and families.

New Workshop: Tax Justice for All

New Workshop: Tax Justice for All

Colin Longmore
May 20, 2021

Today, 719 billionaires in the United States hold four times more wealth than the 165 million people in the bottom half of our economic spectrum.* At the same time, the racial wealth gap continues expanding.** How did we get here and what does it mean for our communities? Join me for NETWORK’s newest workshop: Tax Justice for All: Unveiling the Racial Inequity of the U.S. Tax Code

This 90-minute workshop looks at the U.S. tax code and economic inequality in two parts. First, we’ll explore how the tax code currently disadvantages women and people of color together. Second, you’ll work with fellow justice-seekers to reimagine a new tax code to build a just and inclusive society.

Sign up for one of NETWORK’s upcoming virtual workshops today!

Tax Justice for All
Wednesday, May 26 from 12:00-1:30 PM Eastern: Register here
Tuesday, June 1 from 3:00-4:30 PM Eastern: Register here
Thursday, June 3 from 12:00-1:30 PM Eastern: Register here
*Please note, this is a standalone
workshop, not a series, so the same workshop will be presented each time.

Taxes and President Biden’s American Families Plan

Taxes and President Biden’s American Families Plan

Colleen Ross
April 28, 2021

The American Families Plan, the second part of President Biden’s transformational plan for U.S. jobs and families, makes investments into our nation’s children, our education system, and our health care.

While some members of Congress have already begun a strong campaign against the plan’s changes to the individual side of the tax code, it is long past time to modernize the tax code and make it more just.

Here’s a look at the transformational investments in the American Families Plan:

  • Extend the Child Tax Credit increases in the American Rescue Plan through 2025 and make the Child Tax Credit permanently fully refundable.
  • Make the Earned Income Tax Credit Expansion for childless workers permanent.
  • Extend expanded ACA premiums tax credits in the American Rescue Plan.
  • Permanently increase tax credits to support families with child care needs.
  • Expand summer EBT to all eligible children nationwide.
  • Create a national comprehensive paid family and medical leave program
  • Offer two years of free community college to all Americans, including Dreamers.

Read the White House summary of the American Families Plan here.

The American Families plan reverses the biggest giveaways that were passed in the 2017 tax law and reforms the tax code so that all contribute to our shared prosperity in a just tax system, including the wealthiest.  These reforms are urgently needed at a time when economic inequality and the continued persistence of the racial wealth and income gap are harming our country. We cannot be a healthy country while systemic racism and economic inequality continue harming individuals and families in our nation.

For this reason, we support the tax reforms included in the American Families Plan which specifically address the ways that the tax code widens racial disparities in income and wealth. These reforms include:

Increasing the top tax rate to 39.6%

One of the 2017 tax cut’s clearest giveaways to the wealthy was cutting the top income tax rate from 39.6 percent to 37 percent, exclusively benefitting the wealthiest households—those in the top one percent. This rate cut alone gives a couple with $2 million in taxable an annual tax cut of more than $36,400. The President’s plan restores the top tax bracket to what it was before the 2017 law, returning the rate to 39.6 percent, applying only to those within the top one percent.

Enforcing compliance with the tax code

The American Families Plan would invest $80 billion to strengthen IRS enforcement, which has been decimated over the last decade and improve reporting on the income for high-earners. According to ProPublica, millionaires get audited at close to the same rate as workers with less than $20,000 of annual income. The Treasury estimates these enforcement improvements could raise $700 billion over 10 years.

Changing how capital gains are taxed

The biggest source of income for the wealthiest people in the U.S. is the profit they make from the gain on stock or other assets; this is known as capital gains. (This creates the much-talked about reality where Warren Buffet pays a lower tax rate than his secretary.)

The American Families Plan would partially fund the programs it proposes to invest in children and families by taxing income from capital gains like the taxes workers pay on their wages. It does this by closing two major loopholes that create the current system where wealth has a lower tax rate than what many middle-class workers pay on their wages.

Our partners at Americans for Tax Fairness explain how the plan closes these two loopholes:

  • For people making more than $1 million a year, or the richest 0.3% of taxpayers, Biden wants to eliminate the nearly half-off tax discount they currently get when they sell assets at a profit. Instead of paying today’s top tax rate of 20% on the profits from the sale of assets like corporate stock, the rich would pay the same nearly 40% they already pay on their big salaries and other income. The current capital-gains discount is what allows a billionaire to pay a lower tax rate than a teacher or truck driver.
  • Biden also wants to tax the wealthy on the accumulated gains of assets they inherit—gains that now go completely untaxed. The plan would only apply to gains over $1 million per individual, $2 million per couple ($2.5 million per couple when combined with existing real estate exemptions). This reform will narrow the wealth gap, limit the creation of economic dynasties, and raise revenue for services vital to all of us who do not inherit a fortune.
  • Together, these two reforms would raise around $300 billion over 10 years exclusively from rich people. This will narrow the wealth gap and limit the creation of economic dynasties. It will also fund investments in healthcare, childcare, education and tax credits for working families that raise millions of children out of poverty. (The Tax Policy Center estimated a similar plan proposed by the Biden presidential campaign would raise $327 billion.)