Eliminate Income Tax for Low-Wage Earners

If Democrats want to win the presidency and both houses of Congress in 2020, they’ll need a bold agenda. Simply being anti-Trump will not suffice. So, here’s an idea for that agenda:

Eliminate federal income taxes for anyone making less than $50,000 per year.

Consider the numbers. In 2017, the federal government raised $3.3 trillion in revenue; $1.6 trillion of that revenue came from the income tax.

Yet, per Pew Research, 61% of all returns filed have an adjusted gross income of less than $50,000 per year. These returns generate just 5.4% of federal income tax revenue. That’s about $86.4 billion per year — just 2.6% of federal revenue.

Now, consider the benefits of not subjecting these folks to an income tax. First, hundreds of millions of Americans would receive a much-needed raise. Second, that money would cycle back into the economy. It’s likely this occurs via consumption, thereby driving economic growth. Third, the burden placed on the Internal Revenue Service would decrease. That would save money.

It’s hard to imagine that any politician making such a bold proposal would not enjoy a surge in support. It’s a triple whammy that’s popular, generates economic growth and gets government out of the lives of everyday Americans in a very substantial way. And, if you’re a Democrat, it takes the issue of tax cuts away from the Republicans.

If you’re concerned about any increase in the debt, don’t be. As Beardsley Ruml, former chairman of the Federal Reserve Bank of New York, argued in 1946, “Taxes for revenue are obsolete,” at least for the federal government. But if you’re concerned, we can always raise taxes on the wealthy (and we should).

Originally printed on as a letter to the editor of the Richmond Times-Dispatch. Click here to view.