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Must-Read: Laura Tyson and Lenny Mendonca: Kansas or California?

Must-Read: Laura Tyson and Lenny Mendonca: Kansas or California?: “Donald Trump and congressional Republicans[‘]… claims are baseless… https://www.project-syndicate.org/commentary/increase-earned-income-credit-and-minimum-wage-by-laura-tyson-and-lenny-mendonca-2017-07

…Countless international, national, and state comparisons have demonstrated overwhelmingly that trickle-down economics is a regressive fantasy. The latest evidence of this comes from Kansas, where tax cuts signed by Governor Sam Brownback in 2012 have utterly failed to deliver growth…. Trump should take a lesson from California–a progressive state that he loves to hate. California raised taxes for top earners in 2012 and has since enjoyed one of the strongest growth rates in the country. And now, California is significantly expanding its earned income tax credit, CalEITC, building on the proven record of the federal earned income tax credit (EITC)… originally based on the negative income tax proposed by Nobel laureate economist Milton Friedman. The EITC… it was enacted under President Gerald Ford, and has been expanded under Republican and Democratic presidents alike: Ronald Reagan, Bill Clinton, George W. Bush, and Barack Obama….

California is also one of 21 states that raised its minimum wage this year. By 2022, its statewide minimum wage will be $15 per hour–the highest in the country. Kansas, by contrast, is one of a handful of states that still adheres to the federal minimum wage of $7.25 per hour… 20% lower than… during the Reagan presidency…. The EITC and the minimum wage are complementary policies that bring about better outcomes when used in tandem. Because the EITC expands the supply of low-income workers, it can exert downward pressure on wages. But with a higher minimum wage, that “leakage” effect is mitigated. Accordingly, California plans to increase its CalEITC income-eligibility threshold as it phases in its higher minimum wage….

Trump… should take a lesson from progressive states like California… unlike the supply-side embarrassment that Kansas has become…

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Must-Read: Laura Tyson and Lenny Mendonca: Kansas or California?

July 5, 2017

AUTHORS:

July 5, 2017

AUTHORS:

U.S. economic mobility trends and outcomes

U.S. income and wealth inequality are no longer increasing, but a return to the equitable levels of the mid-20th century isn’t likely anytime soon