Politics, Moderate



Feel-good ideas that need a hardheaded examination

Catherine Rampell on

In other words, high inequality in the United States says more about our taxing and spending choices than our paychecks.

There have been quiet efforts to expand some of these post-tax anti-poverty policies. This year alone, EITCs have been added or expanded in six states, according to the Center on Budget and Policy Priorities. But all these changes were done legislatively, rather than through well-advertised ballot initiatives. They get much less press coverage and popular organizing relative to, say, the Fight for 15.

At a conference last fall, I asked Jason Furman, then chair of President Barack Obama's Council of Economic Advisers, about the country's reliance on pre-tax vs. post-tax measures to help boost economic security. He said he favored using both kinds of tools (as do I). But he also noted a remarkable disparity in progressive enthusiasm for the two approaches, especially relative to payoffs.

During Obama's tenure, the White House oversaw an expansion of overtime protections that was expected to put an extra $1.2 billion into workers' pockets. It also helped pass tax-code changes that put an additional $28 billion in the pockets of low- and moderate-income families. Guess which inspired more attaboys?

"The amount of the incoming we got on the overtime rule in the White House was I would say about 10,000 times as much as the amount of incoming we got on the earned-income tax credit and the refundability of the child tax credit," Furman said.

Maybe boosting paychecks is just inherently easier to understand than complicated tax-code changes.

Or maybe extracting more money from Big Business has greater political appeal to an increasingly anti-corporate base than does extracting more money from taxpayers.

Whatever the reason, the dearth of excitement for these post-tax policies is a strategic mistake. Programs such as the EITC and food stamps, if well-designed, complement the minimum wage. They can do things that the minimum wage can't, such as grow more generous for larger families. Critically, they also don't raise the cost of employees, which means the well-heeled business lobby is less likely to fight them.

Post-tax policies can distort labor markets too, of course -- especially if they result in benefit "cliffs" that discourage people from working more. That's where smart design comes into play.

But every policy has limitations, which is why those on the left would do well to consider every tool at their disposal. Bleeding hearts are often helped by hard heads.


Catherine Rampell's email address is crampell@washpost.com. Follow her on Twitter, @crampell.

(c) 2017, Washington Post Writers Group



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