Morning Must-Read: Jason Furman: Poverty and the Tax Code

Jason Furman: Poverty and the Tax Code: “The creation and expansion of these tax credits have served as a powerful demonstration that the old adage ‘a program for the poor is a poor program’ need not always be true….

There has been a long-standing torrent of fierce criticism of the EITC and the partially refundable child tax credit, including claims of fraud, criticism of beneficiaries who end up not paying any federal taxes (going so far as to call them “lucky duckies”), and strong resistance to extending or expanding the benefits…. But… the political success of these credits over the years is also likely a function both of the inherent work requirement and the fact that they are administered through the tax code, which is a universal system… not just tax credits for one section of the population, but… provide broader insurance to a much wider set of beneficiaries over time…. Over an 18-year period, because of fluctuations in income, more than half of taxpayers benefitted from the EITC. (As an aside, a similar point applies to other programs like nutrition assistance or unemployment insurance)…. The relative size and scope of the tax credits compared to traditional means-tested programs underscores the extent to which poverty-alleviation programs now emphasize employment…