Sen. Murray to launch tax cut bill

When the Earned Income Tax Credit (EITC) was first enacted under President Ford in 1975, kids were playing with Rubik’s Cubes and listening to 8-tracks. Disco was at its peak.

You don’t hear much about disco anymore—and that’s not all that’s changed.

{mosads}Policies like the EITC have succeeded in helping millions of households lift themselves out of poverty—but the makeup of our workforce has shifted dramatically in the last few decades.

Roughly two-thirds of married couples with children now rely on earnings from both spouses. Young people are having an especially tough time finding work. And more and more, low-wage earners aren’t teenagers with summer jobs—they’re middle-aged workers trying to make ends meet.

Republicans and Democrats have come together to expand opportunity through the EITC multiple times in the past. We need to build on this bipartisan tradition and help struggling workers and families overcome the barriers they face in the 21st century economy.

That’s why I am introducing the 21st Century Worker Tax Cut Act, a bill that would complement critical reforms like raising the minimum wage by providing targeted tax cuts designed for today’s workforce. This bill builds on work incentives both Republicans and Democrats agree have been effective, and it is paid for by closing wasteful loopholes both parties have proposed eliminating.

The 21st Century Worker Tax Cut Act would update our tax code to help today’s families keep more of what they earn.

Our tax brackets are structured so that the second earner in a household often pays a higher tax rate on his or her earnings than the first. This means in addition to work-related expenses like child care and transportation, and the possibility of losing tax credits and other benefits as their income rises, a two-earner family can owe more income tax together than separately. This can add up to implicit marginal tax rates on struggling families higher than what many of the wealthiest Americans pay. It can discourage a potential second earner, like a mother considering re-entering the workforce, from returning to her professional career.

The 21st Century Worker Tax Cut Act would give working families a 20 percent deduction on the second earner’s income. A mom or dad who gets back in the workforce and brings home an extra $25,000, for example, would get a $5,000 deduction. Assuming this family is in the 25 percent bracket, this bill would put $1,250 back in their pocket for groceries, child care, or retirement savings.

The bill also reflects the reality that workers without dependent children, and young workers just starting out, are being left behind under the current EITC.

Unlike low-income workers with kids at home, workers without dependent children receive little or nothing from the EITC. This means older workers whose children are out of the house, many of whom have been hit hard by the recession, are being hurt by our current tax policy. And young, childless workers under 25, who are starting out in a tough labor market, aren’t even eligible for the credit.

In an economy where more low-wage earners are middle-aged, and where young people are struggling to gain a toehold in the job market, this just isn’t acceptable.

The 21st Century Worker Tax Cut Act would increase the EITC for workers without dependent children and lower the eligibility age for the credit from 25 to 21. The Treasury Department estimated similar changes would help more than 13 million struggling workers climb the economic ladder.

Workers and families are playing fair—and the biggest corporations should too. That’s why this bill would be paid for by closing an unfair loophole that lets corporations claim outsized tax breaks by paying executives in stock options instead of regular paychecks, and by stopping multinational corporations from shifting profits into tax havens like the Cayman Islands to avoid paying their fair share.

Closing these egregious loopholes has bipartisan support. Democrats and House Ways and Means Chairman Dave Camp (R-Mich.) have proposed eliminating each of them. And updating our tax code to give tax breaks to struggling workers, instead of big corporations, is just the right thing to do.

Our country has changed a lot since those early efforts to make work pay for families. Now, we need to make sure we are giving today’s workforce the best shot at success in today’s economy. We should increase our outdated minimum wage to give millions of workers a raise, and then Democrats and Republicans need to come together to update our tax code and give today’s struggling workers the tax relief they deserve.  The 21st Century Worker Tax Cut Act would be a strong, fiscally responsible step toward that bipartisan goal. I am hopeful that we can get this done for our workers as quickly as possible.

Murray is Washington’s senior senator, serving since 1993. She is chairwoman of the Budget Committee and also sits on the Appropritions; the Veterans’ Affairs; the Health, Education, Labor and Pensions; and the Rules and Administration committees.