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Hawley wants to revamp federal earned income tax credit

Missouri Attorney General Josh Hawley speaks to GOP volunteers on Aug. 31, 2018, in Imperial, Mo.
Jason Rosenbaum I St. Louis Public Radio
Missouri Attorney General Josh Hawley speaks on Agu. 31, to GOP volunteers in Imperial.

GOP Senate candidate Josh Hawley is pushing for a major overhaul of the earned income tax credit, one of the federal government’s most popular programs aimed at helping the working poor.

In an interview with St. Louis Public Radio, Hawley said he wants to instead deliver a wage boost directly in the paychecks of low and moderate income workers.

Workers who make a certain level of income may apply for the earned income tax creditwhen they file their annual tax return. The actual benefit varies, depending on how much a taxpayer makes and how many children the person has. But it lowers the amount of taxes owed.

Hawley said he wants to revamp the earned income tax credit into something a worker can see in their biweekly or monthly paycheck. The GOP attorney general outlined the proposal in a Monday op-ed in the Kansas City Star.

“So you would look at what that median wage is and everybody who’s beneath that, you would say ‘all of those folks who make beneath that middle point hourly wage are going to get a boost that’s going to take them about halfway closer to the median,’” Hawley said. “You just deliver it through the payroll tax system.”

“I think everybody making below the median deserves a raise,” he added. “And the way we can do that is to institute what I call a work credit, which is just giving folks who are working a steady job — giving them the raise and the reward that they have earned.”

In 2014, Sen. Marco Rubio, R-Florida,made a speech in which he called for replacing “the earned income tax credit with a federal wage enhancement for qualifying low-wage jobs.” He said at the time that this plan would be “a preferable means of distributing benefits since it would arrive in sync with a monthly paycheck rather than a year-end lump-sum credit.”

“A number of folks have thought about this. And economists have thought about this over the years. So there’s some great proposals out there,” Hawley said.

Hawley said the earned income tax credit is complicated — and that many people who can take advantage of it don’t apply.

“Part of the problem with the earned income tax credit is that a lot of people don’t know about it,” Hawley said. “So there’s a lot of money wasted out there. So this is more efficient. And again, the earned income tax credit is directed a lot toward families. Which is fine. But this should be available to every worker regardless of your family status — or whether you’re married or not or whether you have kids or not.”

Asked if he knew how much his plan would cost, Hawley replied that it hasn’t been determined yet. He added that the money would come from general revenue, not from payroll taxes that fund Social Security and Medicare.

“We spent about $65 billion on the EITC every year. We could spend that money a lot more effectively by directing it straight into the hands of workers,” Hawley said. “And that’s what I think we ought to do. Some of these welfare programs that pay people not to work, frankly, we ought to consolidate some of those — and we ought to direct some of that savings to this program to boost people’s wages.”

Hawley’s call to consolidate welfare programs drew ire from U.S. Sen. Claire McCaskill. McCaskill press secretary Eric Mee said in an email: "It sounds like opposing a minimum wage increase and supporting Right-to-Work-for-Less isn't enough for Josh Hawley. Without offering any specifics, he is now suggesting that hard-working Missouri families give up the benefits they need to help make ends meet.”

In response to that criticism, a spokesman with Hawley’s campaign said the proposal would “expand benefits” for workers — adding  that everyone who benefits from the earned income tax credit would benefit from the plan.

Last week, McCaskill highlighted her support of a ballot initiative to raise the minimum wage to $12 an hour by 2023. While he said he hadn’t made up his mind on that measure, Hawley said the proposal was “a little out of the mainstream, in terms of the types of wage increases you might see.”

“Minimum wage folks deserve a raise. But minimum wage folks — that only covers one band of workers at one place,” Hawley said. “I think everybody making below the median deserves a raise.”

Follow Jason on Twitter: @jrosenbaum

Jason is the politics correspondent for St. Louis Public Radio.