EITC Insufficient Perm the alt. The EITC is not an exclusive program and has inconclusive results. Guy Sorman, 2!!. "#hy $ot a $egative Income Tax% & Replace the welfare state with a cash subsidy for the The EITC may resem(le )riedman*s idea superficially, (ut it is +uite different. It doesn’t replace any welfare programs; instead, it adds another layer to them, utte failing to reduce government bureaucracy. And though it is a cash payment, as riedman would have suggested, it goes only to the wor!ing poor; the unemployed continue to receive in"!ind support, such as food stamps. The rationale (ehind this distinction (et een the or-ing and non or-ing poor is that the ta# credit is supposedly an incentive to wor! that is, if you or-, you get a credit to supplement your ages, but if you stop wor!ing, you lose both your wages and the credit. $tudie of the EITC, however, have been inconclusive. Employed single mothers do seem inclined to -eep or-ing once they receive the tax credit, instead of turning to married omen, (y contrast, sometimes stop or-ing once their hus(ands get the cr on top of their salaries. The alleged incentive to wor! is thus not a decisive reason to !eep the EITC.
Perm the alt. The EITC is not an exclusive program and has
inconclusive results.
Guy Sorman, 2011. Why Not a Negative Income Tax? - Replace the
welfare state with a cash subsidy for the poor.
The EITC may resemble Friedmans idea superficially, but it is
quite different. It doesnt replace any welfare programs; instead,
it adds another layer to them, utterly failing to reduce government
bureaucracy. And though it is a cash payment, as Friedman would
have suggested, it goes only to the working poor; the unemployed
continue to receive in-kind support, such as food stamps. The
rationale behind this distinction between the working and
nonworking poor is that the tax credit is supposedly an incentive
to workthat is, if you work, you get a credit to supplement your
wages, but if you stop working, you lose both your wages and the
credit. Studies of the EITC, however, have been inconclusive.
Employed single mothers do seem inclined to keep working once they
receive the tax credit, instead of turning to welfare; married
women, by contrast, sometimes stop working once their husbands get
the credit on top of their salaries. The alleged incentive to work
is thus not a decisive reason to keep the EITC.
