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Redoing thread to fix a spelling error:
Romney's proposal does, however, change the tax code in ways that raise and lower marginal rates for different people.
The overall effect on work incentives is more complex than just the isolated effect of the allowance.
1/ https://twitter.com/mattyglesias/status/1357672764040220673
Romney's proposal does, however, change the tax code in ways that raise and lower marginal rates for different people.
The overall effect on work incentives is more complex than just the isolated effect of the allowance.
1/ https://twitter.com/mattyglesias/status/1357672764040220673
I think it's correct to say: enacting a child allowance in isolation would have little impact on work incentives.
Income effects are small. No phase-out. That's good.
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Income effects are small. No phase-out. That's good.
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But that's not the entire proposal.
The allowance is replacing/reforming a number of policies that have both positive and negative incentives on work: CTC, EITC, Head of Household filing status.
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The allowance is replacing/reforming a number of policies that have both positive and negative incentives on work: CTC, EITC, Head of Household filing status.
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The CTC, TANF, etc. have phase-outs which the allowance replaces. That's a positive for incentives.
But the CTC and EITC are being reformed in ways that reduce phase-ins for households with kids. That's a negative.
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But the CTC and EITC are being reformed in ways that reduce phase-ins for households with kids. That's a negative.
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The net effect on work incentives ~of the entire proposal~ may be closer to 0 than some expect.
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