Tax System, Welfare Laws Encourage the Poor to Stay Poor

It has been suggested that welfare and unemployment benefits prevent people from looking for jobs. Of course, Democrats deny this and press forward with the welfare state like it’s no big deal. However, a new study from Georgia State University shows that many of these programs do encourage these receiving benefits from changing their behavior:

A new, university study demonstrates that many of the government benefits the state offers actually discourage poor people from adopting more productive behaviors.
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“At least in some earnings ranges, the tax-benefit system discourages low-income people from investing in education and training, discourages labor supply, encourages fertility, and provides little incentive to marry or to remain so. To the extent that households are aware of and respond to such incentives, the tax-benefit system creates poverty traps rather than promoting behaviors that enable families to escape poverty,” wrote the authors from Georgia State University. One is an economics professor and the others are students working at the university’s Fiscal Research Center in the Andrew Young School of Policy Studies.

The researchers tracked each of the government benefit programs, such as Temporary Assistance to Needy Families and food stamps as well as income-tax rules, and then they looked at how families of different sizes and incomes would react to them.

They noted that state and federal welfare benefits don’t come from one, comprehensive program. That means there are points where income and family-size result in eligibility for some benefits but not others, signaling conflicting incentives for the people receiving them.

While the Obama Administration is trying to dismantle welfare reform, a bipartisan achievement from the 1990s, here is more empirical data that shows what fiscal conservatives and free marketers have been saying for years.

 
 


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