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Fighting Poverty: are the childless at a disadvantage?

By Victoria Fryer 

As income inequality among United States citizens continues to increase, the issue of what to do about the working poor remains a hot topic in American politics. And with the candidates for the 2016 election beginning to establish their platforms, this is one of those topics that’s making headlines.

Currently, the federal government uses the Earned Income Tax Credit, which is a tax break paid out in our annual tax refund. But as childless American workers know, the biggest tax breaks are reserved for families with children.

This is probably no big deal for many of us. At least for my husband and I, we make a living wage and, though we’d love to get a nice lump sum of our tax money back from the government every February, we really don’t need it.

But I live in an economically depressed region. I know that there are people out there who work hard but can’t rise above the poverty line because they don’t make that living wage. And if they don’t have children, the Earned Income Tax Credit doesn’t really help. So what to do about this underrepresented population?

Oren Cass—a senior fellow at the Manhattan Institute, an economic policy think tank—has published a plan that would replace the Earned Income Tax Credit by subsidizing wages. And this subsidy, that would not be limited to working parents, could arguably help to address the issue of poverty among the childless. (Read more about Cass’ plan here.)

The proposed wage subsidy would set a target wage based on a percentage of an area’s median wage. Then, if someone wasn’t earning that target wage, the government would step in and subsidize up to that wage.

One of the questions is whether a once-annual lump sum, like the Earned Income Tax Credit provides, is more or less effective than an increase in people’s regular paychecks. Cass believes the latter is better, but many argue for the former.

Personally, I’m not sure what to think. I’m not a policy wonk. I’m not an economist. And I’m also not a republican—and Cass, formerly Mitt Romney’s domestic policy point person, does approach his ideas from a fiscally conservative perspective. (And, if you’re following the republican candidates, it’s worth noting that Marco Rubio has expressed support of Cass’ idea.) But issues of poverty and income inequality are important to me, and I’m paying attention to what every 2016 candidate has to say on their own platforms about these issues.

What do you think? Is Cass’ idea to replace the Earned Income Tax Credit with a wage subsidy good for the working childless, or should we just reform the tax credit?

Victoria Fryer is a 31-year-old writer and content strategist. She lives in Pennsylvania with her husband and two pit bulls. You can find her on Twitter @extoria.

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Comments

  1. Government subsidizing wages has been a hot topic here in the UK recently. The policy was introduced by the previous labour government. However, it is now viewed my many as an anomaly which encourages companies to pay their workers wages that are below the living wage. By abolishing this subsidy, the current government is hoping that it will force employers to pay higher wages.

    Childless people are generally overlooked when it comes to tax breaks, and making the system fairer for everyone is the right thing to do.

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