Quiz: Do you favor giving some help to poor kids but even more to the rich?

That’s the tradeoff in the new tax bill

Friends,

Last night, the House passed a bill. That itself is enough to raise a few eyebrows. The amazing thing is that the bill would reduce child poverty.

Let me pause a moment to ask you the same hard question I ask my class (and those of you who watch my first “Wealth and Poverty” lecture will see how the class responds).

What if it was possible to make the poor a bit better off — but to do so, you have to make the rich even better off? Are you okay with this?

Some people say fine. Anything that improves the lives of the poor is worth it. Other people say no way. Inequality is already out of control. We don’t want to widen inequality still further.

Well, last night Speaker Mike Johnson eked out a House floor vote in favor of a $78 billion bipartisan tax package that would benefit poor kids a bit, and big corporations and the rich quite a lot. (Overall, the deal would have little impact on the federal budget because it tightens some tax loopholes.)

About half of the sum would restore part of the child tax credit (although substantially scaled back from its pandemic-era level) — getting cash to families of roughly 16 million children who currently get a partial credit or none at all because their incomes are too low.

It would thereby pull close to half a million children out of poverty, according to estimates by the Center on Budget and Policy Priorities, and it would improve the financial security of about 5 million other children who remain below the poverty line, once the proposal is fully in effect.

That’s commendable.

But the other half of the $78 billion tab restores a set of business tax breaks that will benefit the richest 1 percent of Americans quite a lot, and the richest 0.1 percent even more. (Both provisions would last through 2025.)

If the bill gets through the Senate and is signed by President Biden, households in the lowest income quintile (incomes up to $29,800) would see gains in after-tax income averaging 0.3 percent — $60 — a year, according to the Tax Policy Center.

But the corporate tax cuts will boost the incomes of families in the top 1 percent (those with annual income above $980,000) by an average of 0.5 percent — $9,500 — a year. And the richest 0.1 percent of Americans would get an average tax cut of $57,530.

If you had to vote on this bill, which way would you go?