A thought about changing the CTC, couldn't you just tax it away from rich people instead of denying it to them?
That is, every parent gets CTC, even rich ones, but rich ones have their tax bill increase by the full amount of the CTC (so they get the money and then pay it back in taxes).
That would mean that instead of having to prove you were non-rich to get it, the IRS would have to prove you were rich to take it away.
In the UK there is a simple but mildly annoying system whereby anyone could claim child benefit without a means test, but if you are over the income limit for the benefit (about $70k p.a.) it would just be taxed back at 100% at the end of the year. Same result, but no mandatory means test for Child Benefit. You can opt out of the benefit if you don't want the tax hassle
What is the chance that the CTC gets made permanent? It seems like having a large number of families receive actual money from a program that already polled pretty well before it was implemented bodes well for its future.
Is there anybody working to merge all federal benefit programs to make enrollment and distribution easier?
*****“Why will people work if they can get money whether or not they work?”*****
This utterly inane question often asked by right wingers is seldom uttered in good faith (unless they're a lot stupider than I think; which I doubt is the case). People work -- even when the government gives them money regardless of their employment strategy -- because they'll enjoy a much higher standard of living if they do so.
As far as I can tell, there is not a single critic of the expanded CTC who engages with the point Matt offers here (on the difference between this and old welfare) in good faith.
I’m not saying people who oppose this are evil or anything, and they can justify this in all sorts of ways, but do they realize how awful it sounds to the rest of us when they say “children shouldn’t get money because we don’t want to discourage their parents from working”?
Great article. The new CTC should be the model for reform of the entire social safety net. In my opinion, the biggest difference between the new CTC (pro-work) and the AFDC (anti-work) is the way benefits are structured. Under the AFDC beneficiaries faced punitively high benefit reduction rates, which they continue to face under TANF. Under the CTC low-income parents who want to work face no benefit reductions. (For a full discussion of the impact of benefit reduction rates and effective marginal tax rates, see http://tiny.cc/wkin .)
Who exactly drops out of the work force because of “macroeconomic conditions?”. I’m not disputing the statistics, it just seems like a pretty wrenching thing to do. I can imagine some wives dropping out of the work force when hubbie gets a big raise, but that would happen more often during flush times. Male home makers are still pretty rare, but the same dynamic would apply. I can also imagine young single mothers living with their parents rather than working. That is pretty sensible— the cost of maintaining your own household is high, child care is really expensive, and unless you have great credentials it’s hard to pay for a household and childcare and kids all on your own. Flush times might allow slightly more young mothers to maintain their own households, but that is a high bar to clear even on $20 an hour. Is it mainly older workers with some savings who drop out? The disconnect there is unemployment tends to hit unskilled workers the hardest and they have few savings. I don’t recall any friends or family members saying “I’ll wait til the next boom to work,” it’s always “we can scrape by on one income until the kids are in school” or “our portfolio did well enough we can retire early.”
It seems to me like one way to soften the political blow of "raising taxes" is just to call this particular tax hike "means testing." (And do it over and over and over like Republicans do.) Money is fungible, so it really wouldn't be a lie.
In fact, it's probably possible to structure the tax hike so that that is precisely what it is. That is, all and only the folks who would be phased out now have to pay the tax hike and the hike is equivalent to the current reduction. (For example, we got about $600 for our three kids, but under this system, we would get the full $900 but pay $300 extra in taxes.)
1) For increased autonomous income through an expanded CTC to *not* have an effect on labor supply requires one to assume a weird utility function. One can demonstrate this graphically using econ-101 style indifference maps.
2) In a world of no externalities and competitive markets, this would only increase welfare. But we don't live in a world without externalities; work always produces positive externalities because every worker is a taxpayer.
A thought about changing the CTC, couldn't you just tax it away from rich people instead of denying it to them?
That is, every parent gets CTC, even rich ones, but rich ones have their tax bill increase by the full amount of the CTC (so they get the money and then pay it back in taxes).
That would mean that instead of having to prove you were non-rich to get it, the IRS would have to prove you were rich to take it away.
In the UK there is a simple but mildly annoying system whereby anyone could claim child benefit without a means test, but if you are over the income limit for the benefit (about $70k p.a.) it would just be taxed back at 100% at the end of the year. Same result, but no mandatory means test for Child Benefit. You can opt out of the benefit if you don't want the tax hassle
I was a bit skeptical of CTC versus AFDC before but this post convinced me.
Definitely worth the $0.27 I paid to Slow Boring today. Or even more!
What is the chance that the CTC gets made permanent? It seems like having a large number of families receive actual money from a program that already polled pretty well before it was implemented bodes well for its future.
Is there anybody working to merge all federal benefit programs to make enrollment and distribution easier?
*****“Why will people work if they can get money whether or not they work?”*****
This utterly inane question often asked by right wingers is seldom uttered in good faith (unless they're a lot stupider than I think; which I doubt is the case). People work -- even when the government gives them money regardless of their employment strategy -- because they'll enjoy a much higher standard of living if they do so.
As far as I can tell, there is not a single critic of the expanded CTC who engages with the point Matt offers here (on the difference between this and old welfare) in good faith.
I’m not saying people who oppose this are evil or anything, and they can justify this in all sorts of ways, but do they realize how awful it sounds to the rest of us when they say “children shouldn’t get money because we don’t want to discourage their parents from working”?
Great article. The new CTC should be the model for reform of the entire social safety net. In my opinion, the biggest difference between the new CTC (pro-work) and the AFDC (anti-work) is the way benefits are structured. Under the AFDC beneficiaries faced punitively high benefit reduction rates, which they continue to face under TANF. Under the CTC low-income parents who want to work face no benefit reductions. (For a full discussion of the impact of benefit reduction rates and effective marginal tax rates, see http://tiny.cc/wkin .)
Who exactly drops out of the work force because of “macroeconomic conditions?”. I’m not disputing the statistics, it just seems like a pretty wrenching thing to do. I can imagine some wives dropping out of the work force when hubbie gets a big raise, but that would happen more often during flush times. Male home makers are still pretty rare, but the same dynamic would apply. I can also imagine young single mothers living with their parents rather than working. That is pretty sensible— the cost of maintaining your own household is high, child care is really expensive, and unless you have great credentials it’s hard to pay for a household and childcare and kids all on your own. Flush times might allow slightly more young mothers to maintain their own households, but that is a high bar to clear even on $20 an hour. Is it mainly older workers with some savings who drop out? The disconnect there is unemployment tends to hit unskilled workers the hardest and they have few savings. I don’t recall any friends or family members saying “I’ll wait til the next boom to work,” it’s always “we can scrape by on one income until the kids are in school” or “our portfolio did well enough we can retire early.”
It seems to me like one way to soften the political blow of "raising taxes" is just to call this particular tax hike "means testing." (And do it over and over and over like Republicans do.) Money is fungible, so it really wouldn't be a lie.
In fact, it's probably possible to structure the tax hike so that that is precisely what it is. That is, all and only the folks who would be phased out now have to pay the tax hike and the hike is equivalent to the current reduction. (For example, we got about $600 for our three kids, but under this system, we would get the full $900 but pay $300 extra in taxes.)
2 points:
1) For increased autonomous income through an expanded CTC to *not* have an effect on labor supply requires one to assume a weird utility function. One can demonstrate this graphically using econ-101 style indifference maps.
2) In a world of no externalities and competitive markets, this would only increase welfare. But we don't live in a world without externalities; work always produces positive externalities because every worker is a taxpayer.