Joe Manchin wants to save money on the child credit by means testing. Several left-leaning commentators have raised valid objections to means testing, including: the extra paperwork is expensive and deters genuinely needy applicants; the ceiling creates a work disincentive: and means testing turns the program into “welfare,” which is easy for the GOP to stigmatize and cut. So when, in general terms, is it appropriate to use means testing?
The tests should be as follows;
- How many people, as a percentage of the population, use the subsidized service?
- How difficult is it to get by without the service?
- How severe is the existing market failure?
The best example of a program that should be universal, applying these criteria, is health care. The best example of a program that should be means tested is higher education, without which millions of people do just fine.