Thursday, January 6, 2011

Welfare reform? Let's do it again

But this time, we should target the welfare that benefits people who don't need it:

If every year, the government sent every American -- from the richest CEO to the greenest public-school teacher -- a check covering 30 percent of their health-care costs, we'd think that a bit weird. We'd think it much weirder if we only sent the checks to the workers who happened to be at firms that offered benefits.... Yet that's pretty much exactly what we do. We just hide it in the tax code rather than write it on a check.

Yglesias adds:

At any rate, the whole setup is . . . clever. A program like Social Security essentially yokes the interests of poor Americans to those of the middle class. A program like the health care tax break instead yokes the interests of the middle class to the interests of the rich.

There's a reason I mention tax expenditures as a place to look when trying to reduce the deficit. The progressivity of the tax code could be improved immensely by ditching these tax breaks the benefit the rich and upper middle class vastly more than the poor and working class.

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