By Charles S. Johnson
Much
attention is currently focused on the events which occurred fifty years ago,
the last year in the life of Dr. of Martin Luther King, Jr. In the course of
this year’s many commemorations, too little attention is focused on the causes
to which he devoted his final year. There is a tendency to forget that, at the
end of his life, Dr. King’s central message concerned the need for economic
justice.
The
rapid economic expansion which the United States experienced in the 1960s was
not shared by all Americans. Throughout that decade, despite the gains brought
about by the Civil Rights Movement, the rate of poverty among African-Americans
remained at three times the rate experienced by white Americans.
By
1967, Dr. King had concluded that the Movement’s focus should expand from an
emphasis on civil rights to a broader emphasis on human rights: that African
Americans and other disinherited citizens would never achieve full citizenship
until they attained economic security and, accordingly, that something must be
done to focus the nation’s attention on the problems of poverty and economic
inequality.
Toward the end of 1967, Dr. King announced his intention to lead a
Poor People’s Campaign the following year.
His plan was for thousands of poor people of all races and backgrounds to
descend on the nation’s capital, to demand that government officials address
the needs of the nation’s poor.
Dr.
King spent the early months of 1968 traveling around the country, generating
support for the Poor People’s Campaign. To illustrate the plight of the working
poor, he embraced the struggle of the sanitation workers in the City of Memphis
who were currently striking to demand better pay and working conditions.
The
central demands of the Poor People’s Campaign were summarized in an “Economic
Bill of Rights,” notably including the right to a meaningful job with a livable
wage. In this most prosperous nation on earth, participants in the Poor
People’s Campaign called on the nation to embrace a guaranteed annual income.
In
the weeks following Dr. King’s death, a Committee of 100 began meeting with
members of Congress and leaders of executive agencies to lobby for the
Campaign’s demands. By May, thousands of
the nation’s poor had begun to assemble in an encampment on the National Mall
referred to as Resurrection City, and they began a series of demonstrations in
support of the Economic Bill of Rights.
By the end of June, the inhabitants of
Resurrection City had been evicted. Many of them continued to lobby for changes
in federal policy, with modest results. Others went on to demonstrate at the
Democratic and Republican conventions later that summer.
But
the idea of supplementing the income of the nation’s poor, so prominently
featured in the Economic Bill of Rights, did not die with the evacuation of
Resurrection City. In one form or another, the idea continued to be discussed
among policymakers at the highest level.
The
year 1968 culminated with the election of President Richard Nixon and a renewed
emphasis on economic approaches that were seen as conservative. While many conservative leaders recoiled at
the idea of subsidizing the idle poor, many of them began to embrace the idea
of finding a way to assist the working poor. A major concern arose as to the best way to encourage poor
people to enter and remain in the workforce and thus reduce the number of
families needing what was then referred to as Aid to Families with Dependent
Children (“AFDC”). Some policymakers began to entertain the
idea of a negative income tax, under which people with low incomes would
receive money back from the government instead of paying taxes to the
government.
Conservative
economist Milton Friedman had proposed a negative income tax as a replacement
for traditional welfare: giving to poor people cash which they could use as
they saw fit, rather than giving them an array of welfare benefits. Friedman
believed that such an approach would introduce a new level of simplicity, since
it would be administered centrally by the IRS instead of many different
organizations. Friedman’s approach included the introduction of new lower but
graduated tax rates, such that taxpayers would lose benefits as their income
rose, but they would always come out ahead with a higher earned income.
In
1971 President Nixon proposed a “Family Assistance Plan” welfare reform program
including a negative income tax, guaranteeing money to families with children,
with assistance payments declining as a function of earnings. Although Congress
declined to adopt this measure, policymakers continued to experiment with a
variety of tax-driven approaches to income maintenance. Senator Russell Long proposed a “work bonus”
plan to supplement the wages of poor workers.
The
Tax Reduction Act of 1975 introduced a “work bonus” plan but renamed it the Earned
Income Tax Credit (“EITC), a temporary refundable tax credit for lower-income
workers to offset the Social Security payroll tax and rising food costs. The
EITC was made permanent in the Revenue Act of 1978.
The
EITC is now seen by many as both an anti-poverty program and an alternative to
welfare, because it incentivizes work. President Reagan described it as “the best
anti-poverty, the best pro-family, the best job creation measure to come out of
Congress.”
Recognizing that state and local taxes
continue to disproportionately burden individuals with low and moderate income,
twenty-nine states and the District of Columbia have adopted some form of EITC,
generally by matching the federal credit. These state credits provide a modest
yet critical boost for taxpayers who already receive the federal EITC. State
EITCs are typically claimed as a percentage of the federal credit’s value,
ranging from a low of 3 percent in Montana to a high of 40 percent in
Washington, D.C. Hawaii,
Montana and South Carolina each enacted new EITCs in 2017.
The concept of an
EITC has much in common with the proposals advanced by Dr. King in the last
year of his life. In fact, the EITC
improves on Dr. King’s proposal of a guaranteed annual income by directly
encouraging workforce participation. Georgia, the home of Martin Luther King,
is among the states that do not provide a state match to the federal EITC. By
enacting its own EITC, Georgia can provide much-needed support for working
families while honoring the legacy of one its prominent native sons.
