Planet Money Summer School Govt 2: How taxes change behavior and the economy (Taxes)
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Jul 16, 2025 
Join Darrick Hamilton, Henry Cohen Professor of Economics and Urban Policy, as he discusses the powerful role of taxes in shaping behavior and economic structures. He explores how tax policies can lift people out of poverty and encourage sustainable practices. Hamilton highlights the transformative effects of the Earned Income Tax Credit on low-income individuals, contrasting it with traditional welfare. Dive into the concept of Pigouvian taxes and their potential to address issues like pollution, making economics relatable and engaging!
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EITC Boosts Working Poor
- The Earned Income Tax Credit (EITC) gives bonuses to working poor, encouraging economic mobility.
- It transformed lives by providing cash transfers, helping people pay debts, improve education, and move neighborhoods.
EITC Encourages Work
- The EITC pays more as income rises, incentivizing people to earn more rather than stay poor.
- This contrasts with traditional welfare that reduces benefits as income increases, potentially discouraging work.
EITC Helps Business Investment
- Ray Osorio used EITC to invest in his luxury car service business after cashing out his 401k.
- The EITC provided essential cash to keep his business afloat when savings ran out.