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WELFARE BY ANY OTHER NAME


When we use the term "welfare", we generally mean payments made by the government to a class of individuals living in poverty. The political conversation often turns to whether this class of people deserve to receive the payments.

The question of deserving or not deserving does not seem to come up when we talk about refundable tax credits. And yet, while "tax credits" and "welfare payments" are two different terms, they are in reality the same thing. A $10,000 refundable tax credit is effectively the same as a $10,000 welfare payment.

The federal budget is out $10,000 whether it is a tax credit or a welfare payment. The tax credit just sounds more genteel. A tax credit also sounds better when a congressional representative runs for office. Suppose the government cut a $10,000 welfare payment to one person and replaced it with a refundable tax credit to that same person. Now the politician can say he cut taxes and spending.

This is just a bookkeeping sleight of hand. Net, the federal budget is exactly the same. Welfare payments and tax credits are simply two different phrases that represent a financial benefit conferred on a class of individuals. For some reason, we only question whether welfare payments are deserved. We don't question whether refundable tax credits are deserved.

Resources:

Bartlett, Bruce, The Benefit And The Burden, Simon & Schuster, January 24, 2012


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