How Government Can Best Help Poor People

The government generally should not be in the business of helping poor people, but if it is, it needs to be smart about delivering aid in the best possible way. Currently our government delivers aid to a variety of different groups of poor people through a hodge-podge of programs: Social Security, Medicare, food stamps, farm price supports, public housing and many more. This system has given rise to one of the largest, slowest bureaucracies in the world. How can we improve assistance for the poor from the government?

The solution is beautiful in its simplicity: reverse income tax. A reverse income tax gives people money at a specified percentage rate if they earn under a certain amount. The income brackets could be broken out this way:

Under $30,000 in income, you would receive 50% of the difference in cash from the government. All earnings over $25,000 would be taxed at a flat rate of 20%.

So if you earned $0 in come, you would receive $15,000 from the government to help you avoid destitution. If you earned $10,000 you would receive ($30k-10k)*.5 = $10k.

The reverse income tax system removes favors for special interest groups and also prevents perverse incentives being put in place that would make people WANT to remain under a certain income level. Each additional dollar earned results in more money in the individual’s pocket. The system would also eliminate the enormous bureacracy we currently have, as it could be easily administered along with our current income tax system which already has mechanisms in place for judging income & sending refund checks.

I think that private charities & organizations could do a fine job of taking care of indigent people without government help, but the above reverse income tax system is the best available option for having actual government assistance to the poor.