Children can thrive only with better tax policy

EveryChildThrives.com is the W.K. Kellogg Foundation’s digital storytelling platform that highlights the efforts of WKKF grantees and community partners to realize a more equitable future for children, families and communities. Grantee Voices shares that platform with grantees and partners of the Kellogg Foundation to amplify their work. Our first Grantee Voice comes from Amy Hanauer of the Institute on Taxation and Economic Policy, a non-profit, non-partisan tax policy organization which analyzes tax and economic proposals and provides data-driven recommendations to shape equitable and sustainable tax systems.

Want children to thrive in America? Start with fair taxes.

Children need families and communities that have the essentials. That means excellent care and education from the day they’re born until they’re in a job that pays the bills. What comes in between? Child care, preschool, public school, and affordable college or job training. Vaccines, doctor visits and other medical care – for both kids and parents. Access to the basics – housing, food, clothing – even if parents have stretches where they can’t find a good job. And parks, playgrounds and pools to run, play and swim, inside and outside.

All of this requires fair taxes.

Here in the richest country on the planet, every child deserves a life rich with these sources of security and joy. But we know the statistics. Seventeen percent of children – more than 12 million – live in official poverty, under $24,860 for a family of three. Yet center-based child care for one child costs more than $10,000 a year. The average college graduate owes more than $37,000 in student debt. We’re the only wealthy democracy without universal health care or paid family leave.

To channel more of this nation’s extraordinary wealth into what young people need requires fixing our tax code. Taxing wealthy people and corporations and using the revenue for paid leave, child care, education and health care would transform America for children of every race and family type, in every corner of this country.

That’s where we at the Institute on Taxation and Economic Policy (ITEP) come in. ITEP analyzes federal, state and local tax policy, and helps journalists, citizens and policymakers understand who pays what by income, race, ethnicity and place. This empowers communities to demand tax systems that reduce inequality and fund public services.

As monitors of corporate tax avoidance, we’re the source of the much-loved statistic on the 55 enormously profitable corporations that paid zero taxes in 2020. Congress, after learning more about this, included a 15% minimum tax on billion-dollar corporations in the 2023 Inflation Reduction Act, which will raise hundreds of billions of dollars for climate change prevention, health care and debt reduction. We describe tax avoidance by the uber-rich too. Congress doesn’t tax appreciation on financial assets until they are sold and if they are passed on to heirs without being sold nobody ever pays anything on the change in value, leaving billions permanently untaxed!

We also help research institutes in nearly every state describe the distributional implications of tax policies. This helps them push for better-funded public services and more systemically equitable state tax codes. It helped Mississippi advocates fight off elimination of their state income tax last year and provided support to the Michigan governor as she pitched targeted tax credits to working families. Moving forward, we’re working in states to win things like millionaires taxes or capital gains tax increases, victories we recently helped with in Massachusetts and Washington state.

And we’ve just launched a project called Reimagining Local Taxes that will promote more economically and racially equitable local tax systems, where decades of segregated housing, redlining, and concentrated wealth and poverty have divided communities in ways that fair taxes can help heal.

People who want children to thrive should keep track of our team’s amazing work by subscribing to our newsletter and Twitter feed, and by getting behind these five tax reforms:

1. While teachers, nurses and construction workers have taxes deducted every pay period, most billionaire wealth is in the form of unrealized capital gains (think big stock portfolios that grow every year), which are not taxed. Even when those assets are sold and the gains are “realized,” that income from wealth is taxed at a lower rate than taxes on income from work. We should tax the very wealthiest – those who’ve gained the most from our system – by implementing the Billionaire Minimum Income Tax, equalizing the rates on capital gains taxes with rates on earned income, and expanding state capital gains taxes.
2. Stop letting corporations avoid taxes by shifting profits to tax havens. Instead, pass an international corporate minimum tax and improve corporate taxes at the state level.
3. Fix upside-down state policies that force regular families to spend more of their income on taxes than the wealthiest do by having graduated state income taxes and using the money to pay for community needs.
4. Use the tax code itself to provide targeted refundable tax credits that help families and slash poverty. Do it by expanding the federal Child Tax Credit or the federal Earned Income Tax Credit or by growing these credits at the state level, as many states are doing.
5. Finally and most importantly, once we’ve raised this revenue in smart, fair ways, use it to support kids. Provide affordable or free child care and preschool as most European countries do. Allow paid parental leave as nearly every other country does. Make it easier for working class kids of all races to afford college. And fund the schools, parks and libraries that enrich kids’ lives and help them dream big.

In this country of abundance, we have more than enough to go around: for all the toddlers in Detroit to be in nurturing child care while their parents go to work, for every sixth grader in New Mexico to be in a school they find inspiring, and for every teenager in Jackson or New Orleans to know that affordable college is within reach. We can make sure that from coast to coast and everywhere in between, pregnant women get prenatal care so their babies are born healthy and all children are raised in families where necessities are guaranteed.

Tax policy is crucial to creating an economy that works for the next generation of Americans.