Who Cares About the Poor?
By Arnold Kling
Whether politicians ignore the poor and pander to the middle class or scare the middle class into thinking they are as bad off as the poor, the result is likely to be the same. Most of our policies will continue to be mis-targeted, as analyses by the Pew Economic Mobility Project and CFED have demonstrated. In turn, they will explode the deficit, leaving less money to promote upward mobility among the poor. And those policies that take the form of tax breaks for investing in savings or education will further price the poor out of markets for mobility-promoting assets–whether higher education or homes–by subsidizing investment the non-poor would have made even without tax incentives. Think “mortgage interest deduction”.
This strikes me as a stable political equilibrium. If either political party goes too far in taking away benefits from the affluent and giving more to the poor, the other party will take up the plight of the affluent. The affluent are more numerous and are more likely to vote.
Timothy Taylor has more on the politics of tax reform. We could make our tax system more progressive and more efficient at raising revenue. But it is always in the interest of political entrepreneurs to claim that the affluent are threatened as it is, so we cannot take away their precious mortgage interest deduction or make the tax breaks for education expenses and health insurance less regressive.