In my last blog, I talked about some of the issue surrounding the unbalanced wealth distribution in America. There are few solutions to balance the distribution without total socialism bringing the wealthiest American down to our level. However, there are a variety of ways that we as the individuals, the church, and part of the government can fight cycles of poverty and bring lasting change in the economic structure surrounding the poverty line.
Fighting poverty is an uphill battle unless we can change the entire system. I am an advocate for a strong safety net for lower class citizens in the forms of healthcare and welfare, but the current system has it’s flaws. In most states, all welfare benefits are lost once you reach a certain pay grade. Unfortunately, the extra dollar per hour your employer offers you only increases your annual income roughly $2000, a huge increase, but typically not enough to make up for the lost health insurance, food stamps and other benefits a person receives on welfare. Consequently, the current systems helps keep people trapped in poverty rather than empower them to elevate themselves.
We need a reformed system that not only helps support underprivileged Americans, but also gives them incentives to alleviate themselves from cyclical or generational poverty. One such reform that could vastly alter the welfare system and tax structure in America in a “Negative Flat Income Tax.” In this system, everyone is given a tax credit that they will receive. As an example, the video below proposes $10,000. A person with no income would then automatically earn $10,000 a year. Enter a 25% income tax. Now an individual will continue to increase their net income until 25% of their earnings is greater or equal to the $10,000 tax credit. So for example someone who makes $10,000/year will net $7,500 plus their tax credit for a total of $17,500. While their credit decreased, their net income increased. This insentivizes welfare so that the more you work, the more you make, rather than a sudden drop in coverage. Watch the video for another (and perhaps simpler) explanation:
*Please excuse an ignorant comment about about undocumented immigrants. My apologies.
While I don’t believe that homelessness or poverty can be wiped out by reform alone, it brings us that much closer to breaking cycles of poverty. For incentives and money to work, underprivileged citizens will need a strong network of support from the church and individuals. In my next blog, I will explain a few ways that I believe the church and individuals can effectively fight poverty. Still next time, stay classy.