Consider an economic scheme inwards which average income is $50,000 but alongside much income inequality. To render a social security net, 2 possible policies are proposed.
Which would you lot prefer?
A. A universal transfer of $10,000 to every person, financed past times a 20-percent apartment taxation on income.
B. A means-tested transfer of $10,000. The total total goes to someone without whatever income. The transfer is in addition to then phased out: You lose xx cents of it for every dollar of income you lot earn. These transfers are financed past times a taxation of xx percentage on income higher upwardly $50,000.
I bring seen smart people fence equally follows: Policy Influenza A virus subtype H5N1 is crazy. Why should Bill Gates larn a authorities transfer? He doesn’t involve it, in addition to nosotros would involve to heighten taxes to a greater extent than to pay for it. Policy B is to a greater extent than progressive. It targets the transfer to those who actually involve it, in addition to the transfer is financed past times a smaller taxation increase levied only on those alongside above-average incomes.
But hither is the rub: The 2 policies are equivalent. If you lot expect at the cyberspace payment (taxes less transfer), everyone is just the same nether the 2 plans. The departure is exclusively a thing of framing. Sumber https://gregmankiw.blogspot.com/
