Key Points:
- Congress and the White House are debating “check amounts” for a new round of stimulus.
- Bigger checks inevitably reach higher-income households.
- The chart above shows how a 5% phase-out rate for a hypothetical family of four with two kids, with a $150,000 income threshold.
- For the family of four, giving households $1400 rather than $500 extends federal benefits to families earning more than $226,000 but less than $262,000, even as all else remains equal.
- For any given phaseout rate and income cutoff, higher benefit amounts mathematically guarantee that taxpayer dollars flow higher in the income distribution. Bigger underlying benefits phase-out only once you’re further past the income threshold.