"The Fiscalization of Social Policy: How Taxpayers Trumped Children in the Fight Against Child Poverty" by Joshua T. McCabe (review)

The Fiscalization of Social Policy offers a comparative-historical perspective on the growing use of tax expenditures for social policy purposes. McCabe primarily focuses on the policymaking experiences of the United States, Canada, and the United Kingdom, tracing differences in policy legacies to explain why the U.S., unlike its liberal counterparts, has not expanded its version of a child tax credit (CTC) to non-working families.

The two puzzles underlying the basis of McCabe's investigation make it clear why researchers of poverty and social policy ought to engage with the book's arguments. McCabe first considers how we should understand the increasing fiscalization of welfare state expenditures. Second, he questions why CTCs in the U.S. are targeted at working families, whereas Canada and the UK have extended their tax credits to non-working families.

In explaining the rise of fiscalization, McCabe convincingly points to convenient obfuscation strategies that have allowed policymakers to conceal the real costs of tax-based expansion. Policymakers across the liberal countries were able to classify tax expenditures as "revenues not collected" rather than typical social transfer expenditures. This practice served dual purposes: governments could signal to financial overseers that they were serious about cutting costs, while at the same time expanding benefits for their constituents.

McCabe's answer to the second puzzle—why the U.S. does not have a fully-refundable CTC—is bolder and more controversial. He writes that "the single most important obstacle is not American individualism, antistatism, racial animosity, aversion to welfare, or right-wing resistance" (p. 7). Instead, "it is the cultural legacy of institutions" that have inhibited more recent attempts to expand the CTC in the U.S.

McCabe's explanation for this American exceptionalism is that the U.S. developed a different "logic of appropriateness" relative to the UK and Canada in deciding who should be worthy of receiving government transfers. More specifically, the book highlights three cultural categories that define how one perceives the function of a CTC: income support, tax relief, or income supplementation. In the U.S., the logic of tax relief was cemented in the 1940s when the country failed to follow Canada and the UK in implementing a child allowance (and, as such, adopting a logic of income support).

The institutionalizations of these logics carried consequences when it came time to adjust welfare states in the face of structural and fiscal pressures. After the onset of rapid inflation following the 1973 oil crisis, for example, the U.S. leaned on its logic of tax relief to diagnose the issue as one of rising tax burdens. Soon after, the Earned Income Tax Credit (EITC) was introduced. Canada, in contrast, had already introduced family allowances and adopted a logic of income support. As such, the country's policy response was to strengthen the value its family allowance.

In the 1990s, U.S. policymakers again diverged from their British and Canadian counterparts in deciding how best to address the issue of child poverty. McCabe writes that "the dominant logic of tax relief" again limited the ability of the U.S. to "structure the CTC and the EITC in ways that best reduced child poverty" (p. 171). In contrast, the U.K. and Canada built on their alternative policy legacies to increase social support for non-working families with children.

McCabe's comparative perspective on policy development in these three countries provides the discipline an important reminder of how path dependency shapes the policymaking process. The book makes a compelling case that scholars cannot appropriately understand ongoing attempts to reform anti-poverty policies without considering the cultural legacies embedded into such policies.

Despite the book's strengths, there are a few areas where additional convincing is needed. First, McCabe likely understates the role of racial animosity in his telling of the...