Reverse Robin Hood

The government is meant to play a Robin Hood role, redistribute from those with a lot to those with little. But laws are written and the educated class has the literacy, the intelligence, and the time to take advantage of the laws written for the poor who don't have resources and who never hear about these "benefits" that were supposedly targeted for them.

Here's Dean Baker pointing out the problem, and admitting that as part of the intelligentsia, he took his "share" of the booty...

Housing Tax Credit: Welfare for the Compatively Well to Do

Congress included an $8,000 first-time home buyers tax credit in the stimulus package. This credit expires at the end of November. The Post discussed the prospects of its being renewed.

While the Post included the realtors inflated claims about the economic benefits of the credit, it left out two important points. First, the vast majority of homes purchased with the credit would have been bought anyhow, they were just moved forward. In other words, people who may have bought homes in 2010 or 2011 have decided to purchase their home this year as a result of the credit. The cases in which people who would not have otherwise bought a home opt to do so because of the credit will be the exception. Therefore, for the most part, the economic benefits from the credit in 2009 are coming at the expense of economic activity in 2010 and 2011.

The other point is that the credit is a redistribution from taxpayers at large to first time homebuyers. The size of the tax credit is equal to almost two years of TANF payments to a typical family and could pay for approximately 2.5 kid years of health care under the State Children's Health Insurance Program. This is a questionable redistributive policy to homebuyers who have higher incomes on average than renters. (Full disclosure: I benefited from this tax credit -- thank you very much, suckers!)

While I'm gung ho for aid to those at the bottom of the social heap, I get bothered to realize that a rather large portion of the allocated sums end up not with the poor but in the bureaucratic overhead. Again, money that was meant to redistributed to the poor end up supporting the middle class lifestyle of the bureaucrats who run the program. Shame!

The real solution is something like the negative income tax that Nixon talked about. Funny, I hate Nixon but here's a program of his that I support. He was a right wing commie basher, but he actually was somewhat progressive in his domestic policies (once you overlook his paranoid political style and his patronizing his buddies, and the lies he used to keep the war going in Vietnam).

By removing the welfare bureaucracy and melding the redistribution into the tax system, you can ensure that money goes to those in need and not to those clever enough to milk the system or the dead hand of the bureaucrats who make a living off the poor.