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Megan McArdle

How Conservatives Can Fix Poverty and Win Elections

Conservatives need to rethink their solutions to poverty and unemployment.

Garance Franke-Ruta profiles a couple who may well get divorced in order to qualify for subsidies under the Affordable Care Act. Separately, they'll probably qualify for some subsidy; together, they don't.

This is not the only program that has this effect. Many tax subsidies phase out at higher income levels, from IRAs to student loan deductions, and thanks to the tax deal cut over the fiscal cliff, higher-income earners will face more such phase-outs this year. Meanwhile, at the lower end of the income distribution, things are, if anything, worse. All the means-tested assistance, from Medicaid to food stamps to housing and childcare benefits, start phasing out as you move out of "poverty" and toward the "lower middle class." Those phase-outs constitute a very high marginal tax rate; it is quite possible for someone with a couple of kids to get a raise and thereby be worse off, or to achieve the same effect by marrying their live-in boyfriend.