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Tax Breaks Are a Politically Palatable Way to Reduce Inequality

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New research suggests that we should design policy to give needy people financial indirect support, via tax credits.

Reducing economic inequality by increasing public spending is a core goal of the current Democratic Party. But this progressive idea has traditionally been met with serious backlash, for two interconnected reasons.

Taxpayers are highly reluctant to provide support for people they perceive as undeserving. And because of stubborn racial stereotypes, a lot of voters lump African Americans into that category.

New research reveals that there may be a way to help the needy that is less likely to trigger racism-related resistance. It suggests that programs should be designed to give needy people financial support indirectly, via tax credits.

“Social benefits delivered through the tax code are less likely to trigger racialized thinking than similar or identical benefits delivered directly,” write political scientists Christopher Ellis of Bucknell University and Christopher Faricy of Syracuse University. “This is true, at least in part, because recipients of tax expenditures are perceived as more deserving than recipients of otherwise identical direct spending. For policymakers seeking to reduce inequality, tax expenditures may have one critical advantage over direct spending programs: They are, in all likelihood, more politically feasible.”

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