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People First Economic Plan for Working Families

My grandmother worked her entire life as a maid, a cook, and a babysitter. She raised my mom on her own, and helped care for my brother and me, always putting other folks ahead of herself. She sacrificed for our family, and while she could not pass on wealth or power, she did entrust us with an inheritance of hard work.

This plan is for the working families of America just like mine.

Our economy today is not working for working people, the way it did in the past. The costs of caring for your family are rising year after year, while your paycheck is staying the same. The wealthy few have set up the rules to work for themselves, while working families who labor for a living are left behind. Our economy has changed with technology and automation, but our policies have not kept pace to empower working families with a fighting chance for a better future.

Why in the richest nation on Earth should we tax work more than wealth?

Today, I’m proposing an ‘Inherited Wealth’ tax that ensures folks who receive income in the form of inheritance pay a fair share of taxes, like the rest of us. Income from capital gains and income from labor should be treated the same way: as income. That’s why I’m advocating that we raise the capital gains rate to match the marginal income tax rate for the wealthy. In my plan, I’m also supporting a ‘Wealth Inequality’ tax through mark-to-market system for the richest one-tenth of 1 percent that would tax their capital gains annually. Wealth inequality is a fundamental challenge to our economy, and we must address it. Under my plan, 99 percent of Americans would see their taxes go down or stay the same.

We can ensure that the wealthy pay their fair share and then invest that revenue into relief for working families.

My ‘Working Families First’ Credit includes a universal child credit of $3,000 per child for every family of modest means and a major expansion of the Earned Income Tax Credit. As I’ve previously proposed in my “People First Education” platform, we will provide universal pre-K education, and now I propose expanding that to include universal child care; these programs will lower the cost burden on working families and increase wages for child care workers. Together, the new credit, pre-K education, and child care will help us achieve a bold new goal to reduce child poverty by two-thirds. Furthermore, the foundation of strong working families is gender pay equity, and that’s why my plan includes paid family and medical leave and an equal rights amendment.

This plan is based on the principle of putting working families first and ensuring the wealthiest folks pay their fair share. We can raise wages, reduce inequality, and invest in working families for a thriving middle class and a better future for us all.

1

Ensure the Wealthy Pay their Fair Share

1. Create an “Inherited Wealth” Tax

A new inheritance tax¹ will ensure wealthy heirs pay their fair share of taxes on inherited wealth, just like they would any other source of income, and also prevent the concentration of economic and political power in the hands of a privileged few. Less than 1 percent of the wealthiest heirs would be affected, yet it would raise over $250 billion in revenue over 10 years, consistent with 2009 estate tax levels.
  • Replace the estate tax and gift tax with a unified inheritance gift tax. The first $2 million would be tax free for any recipient over their lifetime, and any additional inherited wealth would be subject to federal income and payroll taxes.

2. Treat Income from Capital and Labor the Same

Whether you earn a living as a Wall Street banker with capital gains or a public school teacher with bi-weekly checks, we should tax income the same way. It’s time to end the tax preference for capital over labor and respect the dignity of work.
  • Establish a Wealth Inequality Tax with mark-to-market taxation of capital for the top 0.1 percent of asset holders, which is about $40 million in assets. Today, labor income is taxed at the end of every year, whereas income from investments, wealth, and capital are not. Multi-millionaires and billionaires who rely primarily on investment income receive different treatment under the law. This change to tax policy would require these very wealthy individuals to pay taxes every year on investment income, regardless of whether they sell those investments. Non-public traded assets would be treated similarly, and taxed at the time of sale, with a charge for deferring tax until that time.
  • Raise the capital gains rate to match taxation of labor income. For years, tax rates on income from wealth, investments, and capital have been lower than taxes on income from work. My plan raises the capital gains rate that would apply to individuals who earn $400,000 or more a year to 40%, ensuring the program does not impact working- and middle-class families saving for retirement.
  • Close the ‘stepped-up basis loophole.’ This loophole allows individuals with significant investments to not pay taxes on investments that would be inherited by an heir. Closing this loophole would require estates to pay their fair share.

3. Repeal the Trump Tax Bill

The American people were promised tax reform, but instead President Trump and the Republican Party enriched their donors, big corporations and the very wealthy. Twenty-eight percent of all the benefits went to just the top one percent. The Trump tax scam is a failed promise that we will repeal in my first 100 days.

¹ The ‘Silver Spoon’ Tax: How to Strengthen Wealth Transfer Taxation (October 31, 2016). Washington Center for Equitable Growth, Delivering Equitable Growth: Strategies for the Next Administration (Fall, 2016). Available at SSRN: https://ssrn.com/abstract=2862144

2

Invest in Relief for Working Families

1. Create a “Working Families First Credit”

Families are working harder than ever for less and less. Real wages are stagnant, and folks are needing to work multiple jobs just to pay the bills. Almost 10 million children, 13 percent of kids residing in the world’s wealthiest nation, live in poverty. This is not just immoral and shameful, but it’s also a policy failure. Our economy is $1 trillion smaller than it could be because of this lost potential. In 2015, Congress tasked the National Academies of Sciences, Engineering, and Medicine with studying how we could reduce the number of children living in poverty by half within ten years, and the experts recommended a policy like this one. While Trump and the Republicans have refused to act, we will use proven policy tools to raise incomes and reduce inequality.

  • Expand the Child Tax Credit (CTC) to provide $3,000 per child for every family, ensuring the credit is fully refundable to support low-income families. This would more than double the current refundable child tax credit, would be indexed for inflation, and would be available in monthly installments. This policy, paired with an expanded Earned Income Tax Credit, universal child care, and universal pre-K, aims to cut child poverty by more than half.
  • Expand and Reform the Earned Income Tax Credit (EITC). Workers deserve a raise, and we can reward hard work by expanding the EITC to more people. The EITC is the single most effective anti-poverty program for working families and is an essential part of a 21st Century Safety Net. We should restructure the EITC to include all dependents, low-income independent students, and workers below the age of 25 and above the age of 65, ensuring folks that care for family members also have support.

The program would additionally allow for monthly payment of credits, the use of Individual Taxpayer Identification Number (ITINs) to qualify for the credit and be paired with efforts to reduce the costs and complexity of tax filing, including through offering free and autonomic filing services by the Internal Revenue Service for individuals who qualify for the credit.

For example, under the ‘Working Families First’ Credit:

  • A single individual earning $18,000 would see their household income increase by $3,000.
  • A single parent with one child, earning $40,000 would see their household income increase by $5,700.
  • A married couple with one child and one adult dependent, which could include an adult individual with disabilities or an elderly grandparent, earning $50,000 would see their incomes increase by $7,200.

2. Implement a $15 Living Wage

​Right now, Mitch McConnell and Donald Trump could increase incomes for over 35 million working families — more than 1 in 4 American workers. For over a decade, we haven’t raised the minimum wage, which has been losing purchasing power every year. It would be worth over $19 an hour if we had kept pace with productivity growth. That’s why organizers, cities, and states have taken action in places like Chicago, Arizona, and Michigan. That’s why I stood with fast food workers in Durham, North Carolina and the Quad Cities in Iowa as they demanded a raise to at least $15 an hour. We need to fight for $15 but also be ambitious for more.

3. Ensure Gender Pay Equity

The foundation of strong working families is equal pay for equal work. We achieve this by expanding workplace protections for paid family and medical leave, passing the Equality Act, and fighting for an Equal Rights Amendment. We need to break down barriers that prevent pay parity between men and women.

  • Guarantee at least 12 weeks of paid family and medical leave to be used during pregnancy, new child leave, to care for a sick family member, for recovery from mental or physical illness, or for other family-related reasons. We should compensate workers at least 66 percent of their salary during that period with a greater degree of wage replacement for low income workers. Additionally, I support expanding job protections and covering the full diversity of American families to include multi-generational families, siblings, and families in the LGBTQ community. These protections would be financed through a small contribution from employers and employees and would be implemented by passing and building on the FAMILY Act.
  • Establish a national paid sick leave standard of at least 7 days a year, applicable to large employers, by passing and building on the Healthy Families Act.
  • Prohibit discrimination on the basis of sex, sexual orientation, and gender identity by passing and building on the Equality Act.
  • Institute protections against practices that contribute to the gender pay gap by protecting workers against retaliation for discussing salaries, preventing employers from requiring salary history, and by raising the standard of proof for employers to implement pay disparities by passing and building on the Paycheck Fairness Act.
  • Pass the Equal Rights Amendment to ensure protections against sex discrimination are included in the Constitution.

4. Invest in Universal Child Care and Universal Pre-K Education

Quality daycare and preK education is expensive, and it’s not a luxury in a 21st century economy. The typical family spends 10 percent of their income paying for child care, and the two million mostly women workers who care for over ten million children are underpaid. Moreover, the best return on investment of public dollars is to invest in our youngest learners. For every one dollar dedicated to high-quality early childhood education, we receive nine dollars in long-term benefits.

  • Enact universal child care for families through federal grants for local, county, state, and tribal governments to create independent child care centers and increase compensation for child care workers for parity with elementary school teachers. This program would be available for all families and no family would pay more than 7 percent of their income. Families at or below 75% of state median income would not be required to pay any fees.
  • Launch Pre-K 4 USA. As mayor of San Antonio, I asked the voters to raise their taxes to invest in our youngest learners. They approved Pre-K 4 SA in my hometown and we now have one of the strongest preK programs in the nation. As a candidate for president, I’m proposing Pre-K 4 USA: an extension of public school education to include all 3-and-4 year olds in America in high quality, full day pre-K, supported through federal partnerships with state and local governments.
I believe that we can be the smartest and the most prosperous nation on earth if we invest in universal child care and pre-K education for all.

5. Build Inclusive Communities

Your zip code should never determine your destiny. The promise of America is that no matter who you are or where you live, if you work hard you can achieve your full potential. For far too many families of modest means, the American dream is not a reality. My People First housing and education plans work together further to advance equality of opportunity. No one should have to leave the community they grew up in to pursue their future.
  • Invest in housing affordability. Across the country, in small towns, suburbs, and big cities, working families are burdened by the rising cost of housing. The rent is too damn high and a home mortgage far too out of reach. My People First housing platform addresses this economic challenge by increasing the supply of affordable housing, creating a new renters tax credit, and expanding HUD choice vouchers to all who qualify. As president, I would also have a commission on zoning to break down exclusionary barriers and support the mobility of working families.
  • Ensure quality educational opportunity for all. Education is how working families advance from generation to generation. The America people invested in me—the son of a single mom and the grandson of an immigrant—and I believe we should invest in all students. My People First education platform ensures college, universities and job training is tuition and debt free so someone’s income is never a barrier to learning.