IRS Can End Child Poverty

This year the US government will lose $207 BILLION because the government made a policy decision to allow rich people to pay significantly less taxes, dividends and long term capital gains are taxed a a lower level than regular income.  You have to be really rich to get taxed less.  That’s a lot of money the USA won’t get.   In contrast, for only $80 billion, the USA could reduce child poverty by a third and reduce the wealth disparity bytween white and black Americans from 16:1 to 1.4:1, a HUGE difference.

Economic opportunity not based on race.  What a great American goal.

The following excerpt from Briefing: Race In America, THE ECONOMIST, July 11, 2020 outlines the details.

Investing early

Then there is child poverty. Expanding the earned-income tax credit (eitc), which tops up the wages of working low-income adults, and a universal child tax credit could drastically reduce child poverty—and reduce the tremendous costs to be incurred decades from now in lower tax revenues and higher expenses on incarceration, homelessness services and health care. A programme combining a $2,700 annual child allowance and a 40% expansion of the eitc would reduce child poverty by half, and cost $110bn a year, according to a report by the National Academies. Canada’s implementation of a similar programme in 2016 took just two years to reduce child poverty by a third.

A more radical idea is that all children should get government-funded trust accounts—“baby bonds”—with the funding for children born into poverty more generous than for the rest. A scheme in which the bonds were worth $50,000 by the time a child born into poverty turned 18 would reduce the wealth disparity between young white and black Americans from 16:1 to 1.4:1 even if it were strictly race neutral, according to calculations by Naomi Zewde of the City University of New York.

This proposal has a price tag close of about $80bn a year. This means that enacting a child tax credit, (Earned Income Tax  Credit, EITC)  expansion and baby-bond programme would still cost less than the $207bn the government will forgo this year by taxing dividends and long-term capital gains at lower levels than income. The idea of paying reparations to the descendants of slaves—a bill that might cost upwards of $4trn to settle—would be much costlier. Nor are they obvious cause for a white backlash, since unlike reparations—or, for that matter, affirmative-action policies at universities and elsewhere—they would be based purely on economic criteria, not racial ones.

 

 

 

 

 

Excerpted from:  https://www.economist.com/briefing/2020/07/09/segregation-still-blights-the-lives-of-african-americans

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