Paul L. Caron

Tuesday, November 29, 2022

Kleiman Presents Impoverishment By Taxation And How American Governments Impoverish Their Own Today At NYU

Ariel Jurow Kleiman (Loyola-L.A.; Google Scholar) presents the following papers at NYU today as part of its Tax Policy and Public Finance Colloquium hosted by Daniel Shaviro: 

Impoverishment by Taxation, 170 U. Pa. L. Rev. ___ (2022)

Ariel_Jurow_KleimanViewed in the aggregate, the U.S. fiscal system is progressive, reduces inequality, and cuts poverty. The system improves on market outcomes by transferring income from rich to poor. Yet this bird’s eye view rings hollow on the ground, where millions of low-income taxpayers across the United States are made poor or poorer by paying their state and federal taxes. In truth, while the U.S. fiscal system may be broadly equalizing and poverty reducing, for many struggling households, it is impoverishing.

This Article offers a new way to measure taxation of low-income households in the United States, presenting a concept called fiscal impoverishment.

Taxpayers are fiscally impoverished when they are made poor or poorer by paying state and federal taxes, after accounting for the offsetting cash or near-cash public benefits they receive. Distinct from the aggregate and anonymous measures by which we typically assess our tax and transfer system, fiscal impoverishment is dynamic and individualized. It highlights individual human dignity and implicates the economic responsibilities of the state vis-à-vis low-income taxpayers.


In addition to introducing the concept, the Article sketches the scope of fiscal impoverishment throughout the United States and recommends adopting impoverishment analysis to guide tax reform at all levels of government. Using stylized households, it explores net tax burdens at various income levels across all fifty states. In combination with U.S. Treasury and Census data, this work reveals that fiscal impoverishment is significant—affecting millions of households—and highly variable—based on a patchwork of federal and state tax and transfer programs. Patterns of impoverishment track familiar safety-net fault lines based on family structure, employment, immigration status, and state of residence. Finally, finding that such impoverishment exists, the Article provides specific reforms and a framework for rethinking taxation of poor households.

Asking Too Much: How American Governments Impoverish Their Own:

The conclusion briefly reiterates the book’s main contributions. It highlights the significant transfer of resources away from millions of poor households and restates the arguments against this impoverishment. It also calls on policymakers and voters to rethink our obligations to each other as mediated through our government programs. Over the past half century, U.S. citizens and residents have increasingly come to view their governments as service providers: We pay taxes and expect to receive goods and services of equal or greater value in return. Media reports calculate taxpayers’ “return on investment” for their tax dollars and thus reinforce this consumeristic view. The necessary consequence of such thinking is that governments treat taxpayers as customers who must pay for the cost of services they receive. This anemic view of government reflects a dangerous fallacy. It ignores individuals’ rights against the state as well as our duties to each other as members of a shared society. This book calls for a more generous understanding of our fiscal compact, one that expects all to contribute as we are able, but that shows mercy to all in times of need.

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