Even with marginal and real tax rates going up, your math still showed that the middle and lower…
Benji Lampel
1

Think about it this way: In World 1, if you earn $0 pre-taxes and transfers, you walk away with $0 after taxes and transfers; if you earn $100 pre-taxes and transfers, you walk away with $90 after taxes and transfers. In World 2, if you earn $0 pre-taxes and transfers, you walk away with $85 after taxes and transfers; if you earn $100 pre-taxes and transfers, you walk away with $95 after taxes and transfers.

Your incentive to work is a lot stronger in World 1 than World 2. The benefits of working over not working are $90 (versus $10 in World 2). It’s no answer to say: “But in World 2 you know that if you work you keep more of the money.” What matters is the difference between after-tax-and-transfer income when you work and when you don’t work. Replacing the child tax credit and the $4,050 per child deduction with a $250 per child per month check narrows the after-tax-and-transfer income difference between work and not work.

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