Second, eligibility rules that create poverty traps — situations with high effective marginal tax rates whereby a given increase in earnings is largely offset by a loss of benefits and increased taxes — should be eliminated.
Third, intact families should be afforded the same benefits as single women with children to avoid an incentive for single parenthood.
The report does not make specific recommendations on how to achieve these goals — those are to come later — but Democrats must realize that admitting the problems does not demand surrender to whatever “mean spirited” solutions they imagine that Republicans will suggest. Remember, poverty traps can be reduced not only by reducing “overly generous” benefits, but also by extending benefits further up the income scale.
More profoundly, the best way to avoid poverty traps is to require work in order to receive most means-tested benefits. With even a minimum wage job as a base, the amount of benefits needed to achieve some acceptable living standard is reduced, and so then is the need for high effective marginal tax rates as income increases.
Work requirements are not punitive or demeaning but the natural way. Work is a primary source of freedom, dignity and full inclusion in human society. But if the individual has the responsibility to work, don’t we have the obligation to make work available?