Why do Democrats love trapezoids?
Sen. Kamala D. Harris (Calif.), one of the Democratic Party’s possible 2020 presidential contenders, earlier this year proposed an enormous tax cut for the middle class. Under Harris’s plan, the government would create a tax credit that matches each dollar an American family earns up to a maximum payment of $3,000, or $6,000 for a married couple.
The benefit scales up the more money a family makes. A person who earns $2,000 would get a $2,000 credit; someone earning $1,000 would get a $1,000 credit; and so on down to $0. The benefit also would phase out at the top of the income distribution, to prevent rich people from enjoying a federal subsidy. The resulting shape of the program’s benefits across the income distribution is a trapezoid, as illustrated below by the Tax Policy Center, a nonpartisan think tank.
Harris’s proposed tax cut would cut taxes for most working-class Americans and is more ambitious than the typical Democratic tax proposal, tax experts said. But its basic trapezoid structure — a phase-in for the poor, flat benefit for the working and middle class, and phaseout for the rich — is remarkably common in policymaking, particularly among Democrats. Harris’s plan is one of at least eight separate plans released by Democratic members of Congress during the past two years to adhere to this trapezoid structure.
Additionally, at least five of the party’s rumored presidential candidates — including Sens. Sherrod Brown (D-Ohio), Amy Klobuchar (D-Minn.), and Tammy Baldwin (D-Wis.) — have backed plans to create new trapezoid programs or expand existing ones.
“For the last 20 years, all tax proposals have more or less had this exact structure,” said Elaine Maag, an expert at the Tax Policy Center.
But devising tax policy this way is not without its critics, and their disagreement reflects a broader split in the Democratic Party over how to tailor social benefits for the poor.
Proponents of the trapezoid programs say giving money to those with no earnings could discourage them from finding work. By increasing the size of the benefit as earnings rise, the federal government is helping Americans who first help themselves, they say. These programs are often also viewed as more likely to pass into law, since they sometimes enjoy support from Republican lawmakers.
But to opponents, that’s another way of doing nothing for those who need help the most — excluding families who do not make enough to qualify. These critics say the government should send checks to the very poor with no strings attached, noting a majority of people in this group cannot work because they are children, students, elderly or sick. They also argue that the phase-in structure may lead firms to cut wages, since the tax benefit increases the labor supply and reduces worker bargaining power.
“This is trying to avoid being seen as giving money either to the very poor or the very rich — that’s what the trapezoid approach does,” said Joshua McCabe, a professor at Endicott College who studies poverty issues and has been critical of the trapezoid structure. “It allows you to avoid the trappings of being seen as giving to the ‘undeserving poor.’ ”
But some on both the left and right disagree with that approach. Samuel Hammond, a welfare policy expert at the libertarian-leaning Niskanen Center, said the trapezoid programs demonstrates the difficulty of using tax benefits to lift families out of poverty. America already spends less on children than almost any other developed nation in the world, according to a recent study by researchers at Northwestern University and the University of California at Berkeley.
“There’s been a tacit, bipartisan prejudice against unconditional cash aid. As a result, America does much more middle-class welfare, and much less for the deeply poor, than other developed countries,” Hammond said.
Matt Bruenig, a poverty expert at the socialist think tank People’s Policy Project, said socialists and liberals should agree the poor not be left out of big federal programs designed to ameliorate inequality. Bruenig also argued that Harris’s program should also not phase out for the rich, to improve its popularity by increasing the number of Americans who use it.
“Designing a transfer program to specifically exclude the poorest Americans is shockingly cruel,” Bruenig said. “We should at least be able to agree that the neediest should not be deprived. Yet depriving the neediest is exactly what these trapezoid programs are made to do.”
Harris’s aides countered that they support other programs that would help destitute Americans, such as Medicare-for-all and expanded Social Security. Harris has alsointroduced a bill that would give significant housing subsidies to poor and middle class renters. Harris aides also noted the bill was introduced with the endorsements of several think-tanks and academics with progressive reputations, including Demos and the economists Darrick Hamilton and William Darity Jr.
The bill’s critics say it has its roots in welfare reform that some poverty experts say contributed to a rise in deep poverty in the United States. President Bill Clinton attempted to “end welfare as we know it” by eliminating the federal government’s direct cash welfare program, Aid to Families With Dependent Children, in 1996. The welfare program that replaced it, called Temporary Assistance for Needy Families, was smaller and more limited in scope.
A number of tax credit programs were created or expanded to encourage the poor to enter the labor market. The earned-income tax credit, originally enacted in 1975, was dramatically expanded in the 1990s. The program pays about $70 billion every year, according to the Joint Committee on Taxation, but it does very little to help the most destitute.
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