Chapter 7: Invest in Ending Poverty

When Leo Tolstoy moved to Moscow at age fifty-three, he was shocked by the poverty he saw and tried to find out what was causing it. He concluded that the problem was himself and other members of his class, whose extravagant lifestyles were supported by poor workers. This was true in nineteenth-century Russia and remains true in twenty-first-century America. Affluent people cause poverty in at least three ways. First, they exploit the poor, constrain their choices, and force them to overpay for housing and credit. Second, they prioritize the desires of the rich over the needs of the poor when distributing government funds. Third, they create prosperous communities from which the poor are excluded, leaving them to endure public squalor.

The first step in alleviating the misery of poverty is to ensure that people on low incomes receive the benefits for which they are eligible. Research shows that shame is not a major factor in the failure to claim benefits. Electronic transfer cards, which look like any other debit card, have proved no more popular than food stamps, which make the customer’s poverty obvious. The main reason Americans living in poverty do not take advantage of government programs is that it is hard and confusing to do so. The most effective way to increase participation in these programs is therefore to raise awareness and eliminate bureaucracy. For example, applications for the Earned Income Tax Credit increased significantly when the form was revised to include less text and more legible fonts.

However, the author suggests a more ambitious goal than simply increasing the number of applicants. He asks how much it would cost to abolish poverty altogether. An approximate figure—which Desmond reaches by multiplying the number of people below the poverty line by the average amount they would need to rise above it—is $177 billion. This is less than 1% of Gross Domestic Product. $177 billion could provide everyone in America with a safer, affordable home, end hunger, and drive down rates of crime and eviction.

How could this money be raised? The author begins with the IRS estimate that the United States loses over $1 trillion a year in unpaid taxes. Corporations use tax havens, and wealthy families use offshore accounts to “defraud the American public, forcing everyone else to pay for their greed.” Congress should give the IRS unlimited funds to pursue tax cheats and force corporations to pay a minimum rate of tax regardless of where they are registered. Corporate tax rates and top marginal tax rates for individuals should also be raised. Desmond adds that even if the reader dislikes these particular solutions, there are hundreds more he could propose. The response that the rich will always find ways to avoid tax is a “defeatist and boring” refusal to take the problem seriously.

There is a long-standing debate about whether money should be spent on targeted or universal programs. Targeted programs such as food stamps are more cost-effective but exclude many people above an arbitrary cut-off point. Universal programs, like the proposals for a Universal Basic Income, are less polarizing but much more expensive. The author points out that it is possible to go beyond the binary opposition of targeted versus universal programs by allowing for a higher income threshold. However, he believes that the most important distinction is between programs that unite people and create goodwill and ones that divide them and kindle resentment. He suggests the following principles as guidance for any anti-poverty program under consideration:

Rebalance the safety net and insist on tax fairness in order to make...