Today’s big debate about the size of stimulus checks has a number of similarities to the debates that surround any other program that spends government money. Almost every single fucking government aid program is delivered as a tax credit, or is means tested, or has some other baroque mechanism attached to it to make sure that someone with “too much money” doesn’t benefit from the program. It seems like our policymakers believe that it’s almost as big a tragedy for someone undeserving to get a dollar from the government as it is for someone else to starve to death for lack of a government dollar. And don’t get me started on tax free health savings accounts and other bets that you have to make on how sick you’re going to get this year in order to use your own pre-tax money to pay for costly healthcare.
Here’s the thing: the simple remedy for any “overpayment” of government assistance is taxation. If I make too much money to “deserve” a $2,000 stimulus check, tax it back. If someone gets food stamps but they made $150K last year, tax it back. Instead of attaching some kind of one-off means test to every government program, thus making each of them overly complicated and less likely to help the target population, just track the handouts from each program and trust that next year’s taxes will settle accounts.
Why doesn’t this happen? I can think of a couple of reasons. First, taxes are politically radioactive and no politician wants to be accused of “raising taxes” even though taxing back a gain that a means-tested program wouldn’t have given you in the first place isn’t “raising taxes”. Second, people are addicted to tax returns, a.k.a giving an interest-free loan to Uncle Sam and getting it back in a check, and taxing back programs would lessen returns, or maybe you’d even owe money on April 15. Third, nobody trusts that taxes are collected fairly and equitably. Fourth, removing the discussion about “deserving poor” from debates over government programs would probably mean that more government money would be distributed, which so-called “conservatives” and some “moderates” wouldn’t like.
Anyway, this is my brilliant and sophisticated policy post of the year. (/s) Just stop worrying about who deserves what, hand out the money, and tax it back later if someone got too much.
(Also, I understand that part of the stimulus debate is based on the fact that higher income folks don’t spend the check, but so what, since we’re going to tax it back anyway.)