Home
/
RELIGION & LIBERTY ONLINE
/
The Federal ‘Anti-Poverty’ Program that Taxes the Poor
The Federal ‘Anti-Poverty’ Program that Taxes the Poor
Jul 1, 2025 5:53 AM

Imagine you’re at the checkout line at the supermarket and the clerk asks how much e your family earns each year. Offended, you ask why that is any of her business.

“We need to know to determine how much sales tax you need to pay,” the checker politely explains. “If you’re classified as the ‘working poor’ you need to pay more sales tax.”

“I think you have that backwards,” you helpfully add. “You mean the working poor need to pay less sales tax, right?”

“Oh, no sir,” she say, still blissfully cheerful. “It’s a new anti-poverty program initiated by the federal government that helps the poor by making them pay an addition sales tax on their groceries.”

Although it isn’t stated so clearly or applied so directly, the federal government has in fact implemented an “anti-poverty” initiative that does just that. As economist Thomas Macurdy says, “Most Americans wouldn’t cheer this program, nor would most political leaders champion it. Yet that is what happens when Congress raises the minimum wage.”

Earlier this year Macurdy published a study in the Journal of Political Economy that examined the effect of the minimum wage on the poor. As he explains in the Wall Street Journal, his findings show that the minimum wage serves as a tax on the poor:

My analysis, using the Bureau of Labor Statistics’ Consumer Expenditure Survey, showed that the 1996 minimum-wage hike raised prices on a broad variety of goods and services. Food purchased outside of the home bore the largest share of the increased consumption costs, accounting for 21% with an average price increase of slightly less than of 2%; the next highest shares were around 10% for modities as retail services, groceries and household personal services.

Overall, the extra costs attributable to higher prices equaled 0.63% of the nondurable goods purchased by the poorest fifth of families and 0.52% of the goods purchased by the top fifth—with the percentage falling as the e level rose.

The higher prices, in other words, resembled a regressive value-added, or sales, tax, with rates rising the lower a family’s e. This is sharply contrary to normal tax policy. A typical state sales tax has a uniform rate—but with necessities such as food excluded, and this exclusion (which exists as well in countries with a value-added tax) is adopted expressly to lower the effective tax rate on consumption by people with lower es.

My analysis concludes that more poor families were losers than winners from the 1996 hike in the minimum wage. Nearly one in five e families benefited, but all e families paid for the increase through higher prices.

Read more . . .

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Between Smirks and Silence: Ending the Epidemic of Prison Rape
“Prison rape occupies a fairly odd space in our culture,” wrote Ezra Klein in 2008, bringing to the fore a subject that is still too often ignored. “It is, all at once, a cherished source of humor, a tacitly accepted form of punishment, and a broadly understood human rights abuse.” We are justifiably outraged by the human rights abuses occurring in foreign lands. Why then are we not more outraged by atrocities here in our own country? Our reactions to...
Is Islam in America on the Rise?
The United States is often perceived as a land of religious freedom and pluralism. Has such a space allowed for the growth of a new generation of young Muslim leaders, activists, and artists? According to a recent article in TIME magazine, the rising prosperity and integration of Muslims in America is allowing for new Muslim leaders to emerge in the American public sphere. Because the United States is faring far better with Muslim cultural and societal integration than Europe, a...
Who Cares about Democracy in Hong Kong?
Not the Chinese government, which e as no shock. But what about the United States? As thisWeekly Standardblog postpoints out, two prominent Hong Kong democracy advocates recently visited Washington in an attempt to secure American support for political reform there, but to little avail. The people of Hong Kong have long enjoyed economic freedom, often ranking at the top of the Heritage Foundation’sIndex of Economic Freedom. Since moving from British to Chinese rule in 1997, Hong Kong has maintained much...
The War On Poverty And The Decimation Of The Family
Life is harsh in Twin Branch, W. Va. Despite the wide availability of food stamps, government-subsidized health care and school lunches, life is very difficult for most of the people living there. The War on Poverty, instituted by Lyndon Johnson 50 years ago, brought a lot of help to this area of the U.S., yet life is no better now, and indeed for many, worse than before that “War.” Trip Gabriel at The New York Times takes a look at...
‘Ban Bossy?’ Let’s Look At The ‘Research’
Remember the “Ban Bossy” campaign? Sheryl Sandberg, COO of Facebook created the “Ban Bossy” campaign, recruiting a horde of celebrities, in order to make sure that girls didn’t feel put out by being called bossy in the 4th grade and thus ruining their entire lives. (“Being labeled something matters,” says actress Jennifer Garner in the Ban Bossy campaign video. So does developing a thick skin.) Now, however, Christian Hoff Sommers of the American Enterprise Institute is here to tell the...
Casualty Call: A Marine’s Reflections on Good Friday
This month marks ten years since I left the Marine Corps. Although I love being a Marine I can honestly say that I don’t miss active duty. In fifteen years of service I sat on the sidelines during three separate wars, and like most Marines, being away from the action drove me insane. Although I had it easy, for some of rades, being on the supporting end back in the U.S. was almost as stressful and emotionally draining as being...
Patriots’ Day is a Forgotten Holiday
Few summed up the American Revolution for Independence better than Lord Acton when he declared, “No people was so free as the insurgents; no government less oppressive than the government which they overthrew.” I’ve written about Patriots’ Day on the Powerblog before, but it’s essentially a forgotten holiday. Only officially celebrated in Massachusetts and Maine and observed on the third Monday in April, Patriots’ memorates the anniversary of the battles of Lexington and Concord on April 19 of 1775. The...
Audio: Sirico on Gnosticism, Poverty and Secularism with Larry Kudlow
On Saturday morning, Acton Institute President Rev. Robert A. Sirico joined host Larry Kudlow on the nationally syndicated Larry Kudlow Show for a wide-ranging Easter weekend discussion. Sirico and Kudlow talked about everything from the so-called “Gospel of Jesus’ Wife” to the collapse of poverty rates worldwide over the past few decades, and ended with a conversation about the ing canonizations of Pope John XXIII and Pope John Paul II, and a reflection on whether the march of secularism can...
The Resurrection Story was Good for the World, Which Begs a Question
Have Christ and Christianity exerted a positive influence on the development of civilization? Eric Chabot summarizes the evidence that it has, touching on everything from slavery to economics to Medieval church music, and concludes his essay by pointing to an atheist scholar who agrees. What’s the upshot if Chabot is right? Something can be useful and still false, so it wouldn’t prove Christianity true. But recognizing that the Judeo-Christian tradition has benefited civilization, and to a degree unrivaled by any...
7 Figures: Inmate Sexual Victimization by Correctional Authorities
“Inmates are still people, and therefore need to be treated as such, with all the challenges and potential that face all human persons,” says Acton research fellow Jordan Ballor. “One of the things it means to treat someone with the dignity they deserve as a human being is to not subject them to conditions where the threat of rape is rampant.” Earlier this year, the Bureau of Justice Statistics reported on one of the most overlooked threats to prisoner dignity...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved