Biden’s work DISINCENTIVE

Systemic Racism?  The current entitlement system discourages the poor from trying to get ahead.

Biden's new CTC does nothing to fix entitlements. 

 https://www.wsj.com/articles/the-child-allowance-welfare-trap-university-of-chicago-study-work-incentive-tax-credit-11633644076?st=0o1jqgmi899m0ma&reflink=article_copyURL_share. 

 we estimate that this change in policy would lead 1.5 million workers (constituting 2.6% of all working parents) to exit the labor force.

https://marginalrevolution.com/

While everyone loves "free" money, money doesn't grow on trees and ultimately we will all have to pay for what we spend.  Encouraging everyone to try to get ahead is good for them and the economy.  Discouraging some to get ahead make them more susceptible to becoming addicted to the hand of the government and helps tear the country apart.

The above charts show the overall marginal Federal tax rate of a family of 4 (2 children over 6) and the individual components that make up the overall rate.  Marginal tax rate mean the amount of taxes you pay on the last dollar of earnings. This overall marginal Federal tax rate includes both taxes and losses of subsidies and affects how families might  increase their income by working a little longer, a little harder, or through improving their skills,

This marginal rate becomes very high, in some cases more than 100%, for those families making less than $50,000 per year, and can be a disincentive for portions of this segment from trying to get ahead.

Note that this affects up to 40% of the US households. 

The problem is the design of the various subsidies and the way they are reduced as income increases. There are 9 components included: Federal Income Tax; Payroll tax which includes both the workers nd the company's contribution to Social Security and Medicare; ACA tax which is the additional tax on higher incomes that is part of the ACA (Obamacare); EITC which is the earned income tax credit which is money that is given to low income workers; CTC - a tax credit, part of which is refundable at lower incomes and which is reduced at high incomes; SNAP which are funds given to the poor for purchasing food; Section 8 which are funds given to the poor to help pay for housing; ACA Subsidies which are funds given to the poor to help buy insurance; and BCTC which is the recently added additional child tax credit.

As shown, the loss of SNAP, Section 8, EITC and ACA subsidies are particularly painful, reducing the incentive to work longer or harder or to improve skills.