Why welfare, food stamps, and other programs often discourage work

Food stamps, welfare, Medicaid and other tax and transfer systems can sometimes penalize people for earning that extra dollar of income

Economists and many policymakers generally agree that our tax and transfer systems should promote opportunity, work, saving, and education rather than consumption. The problem is these programs often penalize people for earning that extra dollar of income. Rather than promoting work and savings, these implicit taxes punish such otherwise positive behavior.

These penalties occur in TANF (formerly welfare), SNAP (formerly Food Stamps), Medicaid, the new health exchange subsidy, Pell grants, student loans, and unemployment compensation. The tax code also is loaded with disincentives to work, save, and study.

Read more by Gene Steuerle at csmonitor.com