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The Hidden Welfare State

The Hidden Welfare State: Tax Expenditures and Social Policy in the United States

Christopher Howard
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  • Book Info
    The Hidden Welfare State
    Book Description:

    Despite costing hundreds of billions of dollars and subsidizing everything from homeownership and child care to health insurance, tax expenditures (commonly known as tax loopholes) have received little attention from those who study American government. This oversight has contributed to an incomplete and misleading portrait of U.S. social policy. Here Christopher Howard analyzes the "hidden" welfare state created by such programs as tax deductions for home mortgage interest and employer-provided retirement pensions, the Earned Income Tax Credit, and the Targeted Jobs Tax Credit. Basing his work on the histories of these four tax expenditures, Howard highlights the distinctive characteristics of all such policies. Tax expenditures are created more routinely and quietly than traditional social programs, for instance, and over time generate unusual coalitions of support. They expand and contract without deliberate changes to individual programs.

    Howard helps the reader to appreciate the historic links between the hidden welfare state and U.S. tax policy, which accentuate the importance of Congress and political parties. He also focuses on the reasons why individuals, businesses, and public officials support tax expenditures.The Hidden Welfare Statewill appeal to anyone interested in the origins, development, and structure of the American welfare state. Students of public finance will gain new insights into the politics of taxation. And as policymakers increasingly promote tax expenditures to address social problems, the book offers some sobering lessons about how such programs work.

    eISBN: 978-1-4008-2241-6
    Subjects: Political Science

Table of Contents

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  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. List of Tables
    (pp. vii-viii)
  4. Acknowledgments
    (pp. ix-xii)
  5. Abbreviations
    (pp. xiii-xiv)
  6. [Part One: Introduction]
    (pp. 3-16)

    Many authors fear that events will somehow conspire to invalidate their research as soon as it is published. One of my goals in writing this book, oddly enough, is to hasten the demise of my subject. If I do my job well, the hidden welfare state will start to disappear. The various programs may continue, but their politics will no longer be so mysterious.

    This study throws new light on the American welfare state by examining a powerful but poorly understood tool of social policy—tax expenditures. Tax expenditures, popularly known as tax loopholes or tax breaks, are “departures from...

  7. [Part Two: Introduction]
    (pp. 43-47)

    Two questions have long puzzled students of the American welfare state. The first is why new social programs were created primarily during two brief periods in the 1930s and 1960s—the two “big bangs” of welfare state formation.¹ The programs we know now as Social Security, Unemployment Insurance, and Aid to Families with Dependent Children all trace their origins to the Social Security Act of 1935. Public housing dates from 1937. Several decades later, the Economic Opportunity Act of 1964 created a variety of educational, employment, and social service programs aimed at the poor (the so-called war on poverty). In...

  8. [Part Three: Introduction]
    (pp. 87-92)

    The following chapters analyze the development of four tax expenditures from the time of their enactment to the mid-1990s. The level of detail in each chapter varies, as two of the programs have existed for almost eighty years and two for only twenty years. The main message in all four cases is the same: the development of the hidden welfare state has been quite different from that of the visible welfare state. To appreciate these differences, one needs to know how scholars have characterized the development of traditional social programs.¹

    According to the social policy literature, the most important feature...

  9. Part Four: Conclusion

    • CHAPTER 9 Politics of the Hidden Welfare State
      (pp. 175-192)

      In the process of conducting research for this study, I came across evidence about other tax expenditures that gave me greater confidence in the patterns I observed in the four case studies. There was nothing terribly systematic about this search: finding information concerning the tax treatment of employer pensions might turn up something about employer health benefits; searching for “tax expenditures” in a computer database might yield references to any number of specific programs; and sometimes just staring at the library shelves near the book I wanted could produce interesting results. In retrospect, my somewhat haphazard search process mirrored the...

  10. APPENDIX List of Interviews
    (pp. 193-194)
  11. Notes
    (pp. 195-246)
  12. Index
    (pp. 247-250)
  13. Back Matter
    (pp. 251-252)