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Boosting Paychecks

Boosting Paychecks: The Politics of Supporting America's Working Poor

Daniel P. Gitterman
Copyright Date: 2010
Pages: 180
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  • Book Info
    Boosting Paychecks
    Book Description:

    When most people think of policies designed to help the poor, welfare is the first program that comes to mind. Traditionally welfare has served individuals who do not work -hence much of the stigma that some attach to the program. An equally important strand of American social policy, however, is meant to support low-wage workers and their families. InBoosting Paychecks, Daniel Gitterman illuminates this often neglected part of the American safety net.

    Gitterman focuses on two sets of policy instruments that have been used to aid the working poor since the early twentieth century: the federal tax code and the minimum wage. The income tax code can be fine-tuned in many ways -through exemptions, deductions, credits, changing tax brackets and rates -to alter the amount of income workers are left with at the end of the day. In addition, it interacts with the minimum wage to determine the economic well-being of many lowincome households.Boosting Paychecksanalyzes the partisan politics that have shaped these policies since the New Deal era, with particular attention paid to the past three decades. It also examines the degree to which they have succeeded in lifting low-wage workers and their families out of poverty.

    Forging a new political bargain that balances labor market flexibility with security for poor working families is one of the most critical challenges facing government today.Boosting Paycheckssheds new light on the scope of this challenge and the political constraints and opportunities policymakers face.

    eISBN: 978-0-8157-0458-4
    Subjects: Political Science, Sociology

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Preface
    (pp. ix-xii)
  4. 1 Boosting Paychecks in America
    (pp. 1-19)

    Self-sufficiency and hard work are core American values. Normatively, Americans expect their fellow citizens to work to support their families. Empirically, full-time participation in the labor market remains central to family economic well-being. Yet most Americans realize that work alone is not enough to keep all workers and their families out of poverty. Many of the 20 million working-age individuals in poverty are working, but even full-time work at the federal minimum wage does not provide enough income for a family of three to escape poverty. Therefore, in addition to programs to help individuals join the workforce, the federal government...

  5. 2 The Political Origins of Federal Taxes on Individual Income
    (pp. 20-41)

    The goal of this chapter is to explain the political development of the federal individual income and payroll taxes, as their basic parameters emerged in the four decades between the New Deal and the late 1970s, and to characterize their impact on low-income earners and their families. Throughout this period, partisan conflict over the federal income and payroll tax largely mirrored broader ideological and distributional divisions within American politics. By 1980 the result was a system that included a higher income tax rate on high-income earners, a lower or zero rate on low-income earners, and a moderate amount exempted from...

  6. 3 The Political Origins of the Federal Minimum Wage
    (pp. 42-62)

    The federal minimum wage emerged from the later New Deal as a mechanism to boost the pretax earnings of low-wage workers, regardless of their family size. It is based on a simple principle, as put forth by Franklin Delano Roosevelt: all able-bodied American workers should receive a “fair day’s pay for a fair day’s work.”¹ Nonetheless, from its inception, it has been one of the most contested issues in U.S. public policy. This chapter traces the debate around the minimum wage from its origins in the late 1930s until the late 1970s and highlights the degree to which it has...

  7. 4 Reagan, Bush, and a New Era in the Politics of Boosting Paychecks
    (pp. 63-84)

    Following the election of Ronald Reagan in 1980, major differences emerged between Democrats and Republicans over the appropriate distribution of federal income and payroll tax burdens and the antipoverty effectiveness of the federal minimum wage. Nonetheless, President Reagan forged a coalition with conservative House Democrats (then known as Boll Weevils) and Senate Republicans to adopt some of the most significant changes to the federal income tax since World War II. The across-the-board income tax reductions that lay at the heart of the Reagan reforms primarily benefited higher-income taxpayers. However, they were accompanied by important changes to the Earned Income Tax...

  8. 5 Clinton and the Fight over Tax Relief for the Working Poor or the Middle Class
    (pp. 85-107)

    In the 1990s, tax relief for more moderate- and middle-income earners emerged as a major partisan distributional goal for Democrats and Republicans alike. By then the combination of a refundable Earned Income Tax Credit (EITC), which aided the working poor, and a variety of non-refundable credits and exemptions, which largely helped higher-income earners, had created a situation that had working families in the middle feeling left out. Middle-income families earned too much to qualify for the EITC and too little to gain much benefit from other tax provisions. In other words, they faced a “middle-class parent penalty” relative to their...

  9. 6 George W. Bush and the Return of Across-the-Board Tax Relief
    (pp. 108-128)

    The opening decade of the twenty-first century brought much more modest gains to low-income workers and their families. The 2000 election gave the Republicans control of the White House and both chambers of Congress for the first time since 1954. Encouraged by projections that put the federal budget surplus at $5.6 trillion over the next decade, the new president, George W. Bush, and Republican leaders in the House seized this opportunity to push for what they would later tout as the largest package of across-the-board tax relief since the 1981 tax reform masterminded by Ronald Reagan. This strategy was driven...

  10. 7 Toward a New Bargain?
    (pp. 129-139)

    Entering the 2008 election season, Republican leaders claimed that they had succeeded in reducing income taxes across the board for all Americans, while Democratic leaders argued that increases in the after-tax income of low- and moderate-income families had been achieved only because they had demanded that additional tax relief be distributed to working poor and moderate-income families. The Republican and Democratic candidates for president in 2008 faced the political challenge of trying to translate these tax policy stories into a narrative about the future of paycheck politics.¹

    Almost all of the tax relief enacted since 2000 was set to expire...

  11. 8 The Past and Future Politics of Boosting Paychecks
    (pp. 140-162)

    The forging of a political bargain to provide economic support to low-income workers and their families was a critical challenge throughout the twentieth century, and it remains so today. This book has analyzed the political development of two key pillars of this “boosting paychecks” regime: the federal tax system and the minimum wage. These policies have followed separate legislative trajectories over the past century. As a result, they do not add up to a coherent policy framework. However, the effectiveness of the minimum wage at alleviating poverty clearly depends on the workings of the tax system and vice versa. Moreover,...

  12. References
    (pp. 163-174)
  13. Index
    (pp. 175-180)
  14. Back Matter
    (pp. 181-181)