---
title: "Income Floor & Wages | A Government That Works for the People"
canonical: "https://govthatworks.org/income-floor"
description: "Chapters 18 and 19: child allowance, Work and Security Credit, marginal-rate ceiling, poverty-trap visualizer, and household calculator."
---
Income security · Chapters 18 & 19

# An Income Floor Without a Poverty Trap

The design tries to do two things at once: reduce poverty and preserve a clear payoff to additional work. The book therefore treats benefit cliffs as a system-design problem rather than as a feature of any single program.

The benefit-cliff visualizer uses a specific hypothetical from Chapter 19. It is not a calculator of any visitor’s actual SNAP, housing, tax, or payroll eligibility.

**Read the source chapter in the book**Chapters 18–19 — Work and the Income Floor

[Open Chapter 18](/reader?ch=18#chapter-18)[Open Chapter 19](/reader?ch=19#chapter-19)

Children$300 / $250

### Universal Child Allowance

$300 per month for each child under six and $250 per month for each child ages six through seventeen, in 2026 dollars. The chapter proposes automatic monthly delivery through Treasury with phase-out only at high incomes.

Work20%

### Work and Security Credit

The book would replace the EITC with a monthly earnings supplement whose phase-out is no more than 20%, designed to preserve a visible return to additional work.

Coordination60%

### Combined marginal-rate ceiling

Treasury would publish representative-family analyses and coordinate tax and benefit phase-outs so combined taxes and benefit reductions do not exceed 60% for covered representative families.

Poverty trap visualizer

## What happens to the next $100 of earnings?

The status-quo example reproduces the chapter's worked hypothetical: payroll tax plus overlapping EITC, SNAP, and rent phase-outs can absorb roughly $83 of the next $100 before income tax. The coordinated example keeps about $48 of that $100; the proposed ceiling guarantees at least $40.

Additional earnings$100

The $83 figure is a chapter-specific hypothetical, not a claim that every low-income household faces an 83% marginal rate. Actual effective rates vary substantially by income, family type, state, and program participation.

**Worked status quo**$17 kept

**Book coordination example**$48 kept

**60% ceiling floor**$40 minimum

Worked current clawback**$83**

Worked coordinated clawback**$52**

## What would the child allowance mean for your family?

My Plan combines the child allowance (net of the Child Tax Credit it replaces), the Health Trust contribution, and the 7% child-care cap for any household.

[Open My Plan calculator →](/my-plan)

**Goal**

A floor under children and working households without making the next dollar of earnings economically pointless.

**Instrument**

Universal Child Allowance; Work and Security Credit with phase-out no greater than 20%; 60% combined marginal-rate ceiling; adult-floor pilots before national expansion; automatic Treasury delivery.

**Who pays**

Child allowance $100–130B/year and Work and Security Credit $30–60B/year above current law. Author planning estimates.

**Who implements**

Treasury and IRS for payments and marginal-rate analysis; Social Security Administration for identity/in-person help; Agriculture and housing agencies for coordinated phase-outs; states for SNAP and employment services.

**Principal risk**

A permanent unconditional allowance could reduce work more than expected, or automatic delivery could produce fraud and error on a large scale.

**Measure / failure trigger**

Child Supplemental Poverty Measure below 5%; no representative family above 60% combined marginal rate; parent employment stable or rising; if parent employment falls more than two percentage points relative to trend or improper payments exceed 10%, redesign is triggered.

The Strongest Counterargument & Our Response

### Best case against

The hardest objection is that a permanent cash floor can reduce labor supply and is expensive even when the economy is strong. A simpler system can also pay the wrong person automatically at scale, and coordinating federal and state benefit phase-outs is administratively difficult.

### The author's response

The chapter therefore pairs an unconditional child benefit with a work-linked credit, caps its phase-out, coordinates overlapping benefit withdrawals, and proposes large pilots before any adult income floor. It also makes work participation and improper-payment rates explicit failure measures.

### What remains uncertain

The size of labor-supply effects at national scale, the administrative feasibility of a real-time marginal-rate ceiling across programs, and the final cost after interactions with existing credits require microsimulation and staged evaluation.

**Read the source chapter in the book**Chapters 18–19 — Work and the Income Floor

[Open Chapter 18](/reader?ch=18#chapter-18)[Open Chapter 19](/reader?ch=19#chapter-19)

## Interactive tool: Benefit Cliff Smoother
The page includes an illustrative dual-line chart comparing a cliff-prone stack of benefit withdrawals with a single graduated phase-out. It is a teaching model and not a household eligibility calculator for any specific federal or state program.