Book contents
- Frontmatter
- Contents
- Acknowledgments
- Part 1 Labels and Consequences: The Failure of Our Fiscal Language
- Part 2 The Why and How of Long-Term Budgeting
- Part 3 Labels and Policies across Budget Categories
- 7 Benign Fictions? Describing Social Security and Medicare
- 8 Tax Expenditures
- 9 Welfare, Cash Grants, and Marginal Rates
- Part 4 Conclusion
- Notes
- Bibliography
- Index
9 - Welfare, Cash Grants, and Marginal Rates
Published online by Cambridge University Press: 18 December 2009
- Frontmatter
- Contents
- Acknowledgments
- Part 1 Labels and Consequences: The Failure of Our Fiscal Language
- Part 2 The Why and How of Long-Term Budgeting
- Part 3 Labels and Policies across Budget Categories
- 7 Benign Fictions? Describing Social Security and Medicare
- 8 Tax Expenditures
- 9 Welfare, Cash Grants, and Marginal Rates
- Part 4 Conclusion
- Notes
- Bibliography
- Index
Summary
“Contrariwise,” continued Tweedledee, “if it was so, it might be; and if it were so, it would be; but as it isn't, it ain't. That's logic.”
– Lewis Carroll, Through the Looking GlassTaxes, Spending, and Marginal Rates
The tax expenditure concept offers a constructive, albeit imperfect, response to the problems for allocation policy that result from mistakenly treating “taxes” and “spending” as meaningful categories. But distribution policy has been badly waylaid as well. In particular, while lifetime net tax rates (treating transfers as negative taxes) have begun to receive some attention in discussions of long-term budget policy, discussions of aid to the poor remain mired in the old terminology, leading to important policy failures.
The point that transfers are simply negative taxes dates back at least to Richard Musgrave (1959). Many economists and lawyers understand it. Yet it has so little penetrated public discourse that, even among experts, few seem to keep it in mind when discussing such basic questions as what the marginal tax rate structure in our country either actually is or ought to be.
Consider two truisms – or actually, falsisms – that are so conventional as to seem almost banal. Both concern the degree of graduation of marginal rates, or the extent to which they increase with income. The first holds that graduated marginal rates are the defining attribute of a progressive system.
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- Information
- Publisher: Cambridge University PressPrint publication year: 2006