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Fri May 26, 2023, 12:24 AM

Congress Should Consider Attaching Work Requirements to the Biggest Tax Break for the Rich


As Congress and the President negotiate on the debt ceiling, one sticking point is the work requirements that GOP leaders want to apply to income assistance programs like Medicaid and SNAP. Instead of focusing on low-income people who are already mostly employed or facing significant barriers to employment, lawmakers who want to encourage labor force participation should revisit existing tax breaks subsidizing wealthy individuals who live off their assets rather than work.

Along these lines, Congress could attach a new work requirement to the tax code’s lower rate for capital gains and stock dividends, which is a tax break that mostly benefits the richest 1 percent of taxpayers, including those who do not work at all and live off their investments. Even if this new work requirement is limited to millionaires, it would likely bring in more than the $120 billion that the House GOP proposes to raise over the next decade by imposing new work requirements on programs for low-income people.

The work requirement for this tax break could limit the capital gains and stock dividends eligible for special, lower tax rates to an amount equal to the taxpayer’s earnings each year. In other words, wealthy individuals’ access to the biggest tax break for investments would be directly tied to their workforce participation.

Work Requirements in the Limit, Save, Grow Act

In April, House Republicans approved the Limit, Save, Grow Act, which would delay a government default for less than a year (through March of next year) in exchange for more than $4 trillion in spending cuts. Republican lawmakers have remained firmly opposed to raising more tax revenue, despite evidence that tax cuts enacted under previous administrations are primarily responsible for the budget gap this century. The bill includes provisions that would cut assistance by $120 billion over a decade by imposing new work requirements on Medicaid, food assistance (SNAP) and Temporary Assistance for Needy Families (TANF).


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