Thursday, October 14, 2021
Ariel Jurow Kleiman (Loyola-L.A.), Revolutionizing Redistribution: Tax Credits and the American Rescue Plan, 133 Yale L.J.F. ___ (2021):
The American Rescue Plan Act (ARPA) dramatically alters the federal government’s approach to redistribution in 2021. Among its boldest reforms are its temporary expansions of the Child Tax Credit and the Earned Income Tax Credit. For the first time, ARPA authorizes meaningful cash support for nonworking families and childless workers, two groups that have been historically disadvantaged by social safety net programs. This Essay considers ARPA’s effects on low-income American taxpayers, spotlighting in particular how the reforms will protect millions of households from being pushed into poverty or further into poverty as a result of paying taxes—a phenomenon called “fiscal impoverishment.” Policy makers must make ARPA’s reforms permanent in order to ensure that low-income taxpayers remain protected past 2021. As they work to do so, policy makers should be mindful of gaps in the tax credits that will undermine the reforms’ positive effects. The Essay identifies several such gaps and argues that Congress should legislate more dramatic inclusion for households with and without children.
Although born out of crisis, ARPA’s reforms reflect a simmering collective awareness that American families and workers deserve better. Widespread fiscal impoverishment in the United States violates human dignity and breaches the government’s foundational duty to not harm citizens and residents. Millions of low-income households are not only excluded from safety-net programs, but are actually made poor by local, state, and federal taxes. ARPA’s reforms eliminate or mitigate this fiscal impoverishment for many. Even so, policymakers could and should do more to support vulnerable households. As policymakers work toward extending ARPA’s expansions, they should ensure that the new law is permanent, as well as sufficiently protective and inclusive. If they fail to do so, it will be incumbent on some future Congress to repair the law and extend support to those who need it most.