Missouri Should Not Stop at a State EITC; Larger Entitlement Reforms Are Needed
This month the Show-Me Institute was proud to publish our 2017 Blueprint for Missouri government, a document that catalogues fifteen state-based reforms to make Missouri more competitive and her citizens more prosperous. Included among the suggested reforms is transitioning some of the state’s welfare spending toward an earned income tax credit, or EITC. Apart from the well-documented economic benefits of the program, the EITC offers other benefits as well, including the promotion of work. As my colleague Michael Austin and I wrote in the Blueprint,
[t]ransitioning current public welfare dollars to an EITC will help foster a culture of self-reliance among the state’s poor while also restricting growth in public welfare spending. Not only does the EITC help working families make ends meet, but it also encourages recipients and families to find jobs and increase hours worked.
The EITC bills that appear to be next year’s legislative frontrunners are encouraging. Longtime readers know that Show-Me Institute writers have long supported unloading destructive income taxes; that the proposed EITCs can help achieve this for the poor is an added bonus to the work incentives embedded in the program.
But for the EITC to do the most good, policymakers should work toward a “transition” to it, not simply an implementation of it. Rather than viewing the program in isolation, EITC supporters should have an eye toward parallel reforms and work requirements in existing entitlement programs as well. That could mean a dollar-for-dollar downsizing of other entitlement programs to make room for the EITC, or the passage of other work-related reforms for able-bodied enrollees in Missouri’s entitlement programs.
A straight up expansion of entitlements, however, should be a non-starter for supporters of small, efficient, and effective government. The EITC should be part of a larger government push toward offering an effective hand up out of poverty, not just a new state program in addition to countless others already in existence. Without that conversation and action toward reducing the costs of other programs, the state risks undermining the good that can come from an EITC—for beneficiaries and taxpayers alike.
