The term seems almost like an oxymoron. But Ram Ahluwalia sent me an interesting article about why the welfare state doesn't help the poor.
What I find most palpable in the article is the idea that a consumption tax is better than an income tax. Consumption is a more accurate marker of well-being. If wealthy people are not spending their money to buy things but instead are investing it (which means it's getting used as capital or loans), that is a good thing. I'd also rather reward thrifty living instead of having a low income. When I was working, I thought it was wacky that I would sometimes make more money when I worked less because of our "progressive" tax structure.
Of course, if you're really wedded to an income tax, you could get rid of the distortionary effect by having a flat tax. But that's another matter.....
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