On March 30, 2011, Katherine Newman and Rourke O’Brien presented from their new book Taxing the Poor. The book examines the way state and local tax structures impact low-income families in the United States. The authors demonstrate how an increasing reliance on sales taxes, taxes that at first glance appear fair, actually have significant, punitive effects on the poor and exacerbate the very conditions that drove them into poverty in the first place. The authors demonstrate that this is particularly true in the Southern region and increasingly true in the West.
Newman started the event by providing an overview of how and why taxation policies have evolved throughout history in different regions of the United States. The overview showed how many states implemented constitutional barriers that make it almost impossible to raise property or corporate taxes and how this translates into the South’s present reliance on sales taxes for revenue.
O’Brien followed Newman’s presentation with an outline of their research and findings. He noted that in the South there is a significant relationship between taxation policies and a variety of variables such as early mortality, infant mortality, high school dropout rates, teen pregnancy, obesity, and crime; areas in which the South shows poorer outcomes than other regions of the country.
Newman discussed possible solutions and next steps noting that this is not just a problem of the South, that the fiscal consequences at the federal level are severe. One solution proposed was to federalize social insurance. Offering a federal policy would eliminate some of the regional differences.
Michael Lind and Ezra Klein provided comments on the presentations. Lind strongly agreed with the conclusions of the authors and agreed that more attention needs to be paid to the arguments about regionalism that the book highlights. He specifically recommended the authors consider the role of tax expenditures in luring businesses as well as the impact of the Earned Income Tax Credit on wage subsidization. Ezra questioned the causal story, whether taxation is the cause of the negative social outcomes highlighted and added that he believed there would be no near term opportunity for the kind of broad, single stroke solutions offered by the authors, regardless of their merits.