Supply Side’s Academic Vindication?

A pair of University of Maryland economists actually found themselves channeling supply side-icon Jack Kemp although they might be loathe to admit it.

At a Brookings Institution conference, associate professor Melissa Kearney and assistant professor Lesley Turner noted thtat today’s SNAP [the federal Supplemental Nutrition Assistance Program]requirements have a “secondary earner penalty.” In layman’s terms, that meant that if both married spouses in a couple worked, they would be taxed or penalized for having both spouses work.

Both Kearney and Turner proposed that the tax code be reformed to cut out taxes on these secondary earners in order to boost the lower middle-class families out of their troubled economic standing. Too often, they said, the secondary earner penalty discourages women from entering the workforce and is why workforce participation is at one of its lowest points after the Great Recession. Turner claimed that “we essentially get more bang for our buck” through this initiative and that for each dollar spent, the families gain $4 in return. She pointed out how the American tax code is “vastly different than most industrialized countries” because it is poorly designed.

But, by giving lower middle-class married couples a tax break, it leads to a loss of about $8.2 billion in tax revenue. However, it would raise about $13.4 million in disposable income for these cash-strapped families (which averaged out to almost $130,000 per family).

 

Spencer Irvine is a staff writer at Accuracy in Academia.
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