Investments in early childhood - Income Security

House Budget: Examining the Powerful Impact of Investments in Early Childhood for Children, Families, and Our Nation’s Economy, July 20, 2022

As usual, the Committee work product is outstanding. Still, it misses the need to remediate parental education deficits (including for immigrants), the need to pay parents to do so and the need for a higher minimum wage (including for participating in training) to strengthen the most vital systems supporting children.

The Child Tax Credit, which should be restored to at least American Recovery Plan Act levels and then beyond them, is to be favored because there is no implicit bias against two-parent families and against enlarging lower income families as well.

When dealing with federal income support in general, the desire for economic justice and environmentalism sometimes conflict. Anti-poverty programs are notorious for not funding those with the father in the home. This is the result of both racism and the desire to limit the number of clients. In short, the Zero Population Growth mentality has made it into housing and income support policy.

There should be no conflict here. The ZPG/racist and cost control arguments are simply unworthy of American Society, while being endemic within them. All people of good conscience should resist such nonsense and I will do so with my last dying breath.

Fix income inequality with higher minimum wages and child tax credits and the free market will respond to the real needs of families. Two parent families with more than two kids should be able to demand three bedroom apartments, all things being equal. End the bias against two-parent families in current programming and creativity will take care of the rest.

INCOME SECURITY

It is time to end the two-tier economy. No one should have to work in what Michael Harrington called The Other America. With the end of welfare as we knew it, circumstances have actually gotten worse since Harrington’s seminal work. The rise of delivery services, which require drivers to earn tips, and the gig economy, which prevents easy tipping, has made things even worse in the name of progress. We are working harder for less. This Committee can start the ball rolling to fix this.

Minimum Wage

The best option for food security and low income housing is to increase incomes by increasing the minimum wage and the child tax credit and indexing them to inflation. 

Increasing the minimum wage to $10 wage should take effect immediately, phasing to $12. You can argue about a $15 or $18 minimum after the midterm elections. Higher minimum wages increase job growth, as lower wage employees spend every dime of the increase, as do higher wage workers below the middle-management level whose wages will also rise. 

Provisions should also be included in law to hold franchisees harmless if minimum wage increases impact their own livelihoods. The conditions of franchise employment and agreement deserve attention as well in terms of agreed to standards, payment of franchise owners in low wage industries and the ability of workers to organize. If some firms decide to turn franchise employment into full-time employment, so much the better.

It is indeed a poor job where the physical productivity of workers in comparison with other factors is under this level, especially when child tax credits are excluded from the equation. The intermediate goal should be either a $12 minimum wage (so that it is comparable to the buying power experienced in 1965) or an $11 wage with a 32 hour work week. 

The perception that doing the right thing makes a business non-competitive is the reason we enact minimum wage laws and should require mandatory leave. Because the labor product is almost always well above wages paid, few jobs are lost when this occurs. Higher wages simply reduce what is called the labor surplus, and not only by Marx. Any CFO who cannot calculate the current productive surplus will soon be seeking a job with adequate wages and sick leave.

The requirement that this be provided ends the calculation of whether doing so makes a firm non-competitive because all competitors must provide the same benefit. This applies to businesses of all sizes. If a firm is so precarious that it cannot survive this change, it is probably not viable without it.

Childcare and Paid Leave

Childcare is best provided by the employer or the employee-owned or cooperative firm. On-site care, with separate spaces for well and sick children, as well as an on-site medical suite for sick employees, will uncomplicate the morning and evening routines. Making yet another stop in an already busy schedule adds to the stress of the day. Knowing that, if problems arise at a work-based daycare, they can be right there, will help parents focus on work.

Larger firms and government agencies can more easily provide such facilities. Indeed, in the Reeves Center of the District Government, such a site already exists. Smaller firms could make arrangements with the landlord of the building where offices or stores are located, including retail districts and shopping malls. For security reasons, these would only serve local workers, but not retail customers.

A tax on employers would help society share the pain for requiring paid leave. Firms that offer leave would receive a credit on their taxes (especially low wage firms). Tax rates should be set high enough so that.

Child Tax Credits

The Child Tax Credit should support the income of each dependent child at median wage levels and be fully refundable. If a parent participates in education and training, their child tax credit should be paid with a training stipend set to the minimum wage. Including these benefits with pay reduces the need for a $15 minimum wage. $12, which is in line with historical averages prior to 1965, should be adequate. 

There are two avenues to distribute money to families. The first is to add CTC benefits to unemployment, retirement, educational (TANF and college) and disability benefits. The CTC should be high enough to replace survivor’s benefits for children.  

The second is to distribute them with pay through employers. This can be done with long term tax reform, but in the interim can be accomplished by having employers start increasing wages immediately to distribute the credit to workers and their families, allowing them to subtract these payments from their quarterly corporate or income tax bills.

Tax Reform

Tax reform will help both low wage and gig/1099/staffing services workers who are essentially full-time but are not treated as such. Because these “vendors” would have to pay the tax and receive the breaks, client firms would have the incentive to hire them instead.

Our tax reform plan, which was last adjusted on June 10th of this year, features a Subtraction Value Added Tax. This tax can serve as an employer-based vehicle for distributing child tax credit, healthcare and childcare benefits.  

The S-VAT could be levied at both the state and federal levels with a common base and tax benefits differing between the states based on their cost of living (which would be paid with the state levy). The federal tax would be the floor of support so that no state could keep any part of its population poor, including migrants. It is time to end the race to the bottom and its associated war on the poor.

Between the CTC and the Earned Income Tax Credit, the CTC is to be preferred. Applying for an EITC is part of why it is expensive to be poor. For most, outside help is needed to calculate it. Having to get such help is a “poor tax.”  Our proposed changes to individual payroll taxes propose a way to end this credit while assuring adequate retirement savings and family income. The following paragraphs are an excerpt from our current tax reform plan.

Subtraction Value-Added Tax (S-VAT). These are employer paid Net Business Receipts Taxes. S-VAT is a vehicle for tax benefits, including

• Health insurance or direct care, including veterans' health care for non-battlefield injuries and long term care. 
• Employer paid educational costs in lieu of taxes are provided as either employee-directed contributions to the public or private unionized school of their choice or direct tuition payments for employee children or for workers (including ESL and remedial skills). Wages will be paid to students to meet opportunity costs.  
• Most importantly, a refundable child tax credit at median income levels (with inflation adjustments)  distributed with pay. 

Subsistence level benefits force the poor into servile labor. Wages and benefits must be high enough to provide justice and human dignity. This allows the ending of state administered subsidy programs and discourages abortions, and as such enactment must be scored as a must pass in voting rankings by pro-life organizations (and feminist organizations as well). To assure child subsidies are distributed, S-VAT will not be border adjustable.

The S-VAT is also used for personal accounts in Social Security, provided that these accounts are insured through an insurance fund for all such accounts, that accounts go toward employee-ownership rather than for a subsidy for the investment industry. Both employers and employees must consent to a shift to these accounts, which will occur if corporate democracy in existing ESOPs is given a thorough test. So far it has not. S-VAT funded retirement accounts will be equal-dollar credited for every worker. They also have the advantage of drawing on both payroll and profit, making it less regressive. 

A multi-tier S-VAT could replace income surtaxes in the same range. Some will use corporations to avoid these taxes, but that corporation would then pay all invoice and subtraction VAT payments (which would distribute tax benefits). Distributions from such corporations will be considered salary, not dividends.

Individual payroll taxes. Employee payroll tax of 7.2% for Old Age and Survivors Insurance. Funds now collected as a matching premium to a consumption tax based contribution credited at an equal dollar rate for all workers qualified within a quarter. An employer-paid subtraction value added tax would be used if offsets to private accounts are included. Without such accounts, the invoice value added tax would collect these funds. No payroll tax would be collected from employees if all contributions are credited on an equal dollar basis.   If employee taxes are retained, the ceiling would be lowered to $85,000 to reduce benefits paid to wealthier individuals and a $16,000 floor should be established so that Earned Income Tax Credits are no longer needed. Subsidies for single workers should be abandoned in favor of radically higher minimum wages. If a $10 minimum wage is passed, the employee contribution floor would increase to $20,000.

Pro-Life Scoring

The following paragraphs should be familiar to members and staff. Now that Roe v. Wade has been overturned, they should be made available to everyone. 

These reforms MUST be scored as pro-life legislation and be funded more broadly than the President has promised.  Having served on the staff of a major abortion rights organization in the past, I can assure you that no such organization WOULD EVER OPPOSE HIGHER LIVING STANDARDS FOR WOMEN AND THEIR FAMILIES!

The chief obstacle for funding families is not the feminist movement. It is the so-called right to life movement who would rather women be penalized for having abortions than subsidized so that they are not necessary. Over the course of many decades, I have had conversations with conservative members of the pro-life community. When push comes to shove, they oppose the measures above because their objections to abortion are more about sexuality than the welfare of children.

In the pro-choice movement, many jump to the defend women’s bodies argument before first addressing the need for adequate family income. Doing so now will shame the leadership of the pro-life movement into supporting these provisions to Build Back Better.

Many in the pro-life movement already do. Catholic Charities USA, NETWORK and the Catholic Health Association all stand with working and poor women. They must be very publicly leveraged to get the U.S. Conference of Catholic Bishops behind them as well - and to have the bishops insist that these measures be considered must-pass legislation for the computation of pro-life voting records. Catholic members of Congress and the President should also lead on this effort. It is time to stop grandstanding on this issue. These measures must pass - and on a larger scale than provided for in Build Back Better. 

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