Essay The Reform Of The Welfare System

1328 Words Jul 14th, 2015 6 Pages
In the endeavor of increasing income equality, multiple laws, regulations and tax credits have been effectuated. For a period of three decades, economists have advocated the use of a tax system for this purpose. For example, transferring the responsibility to a tax system such as Earned Income Tax Credit (EITC) has been proven to be more efficient than other methods, such as the welfare system. The welfare system has not been completely transferred to a more efficient tax system due to political reasons, not fiscal. Still, since 1975, after a debate over Nixon’s Family Assistance Plan (FAP), the EITC has been in functionality. The two main reasons why the financial booster has been proven to work are: only tax payers who work can be eligible for the EITC, and the EITC’s income transfer is usually received as part of a taxpayer’s annual tax refund. The first advantage has increased the labor force participation, especially among single mothers with children, creating a larger workforce which results in beneficiating income equality. The tax system indirectly helps equality by the increase of injection of supply to the workforce, which translates into a stronger economy.
The Affordable Care Act passed on December 2009 benefits income equality because governmental assistance can be considered as part of the income. When income is transferred from high-income individuals to low-income families, it results in an increase inequality. Approaches of The Affordable Care Act have…

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