On redistribution

Abstract

Redistribution policies should mostly take the form of explicit transfers to poor people financed by tax revenue. Other policies should treat an increase in utility for the wealthy identically to an increase in utility for the poor. The distinction between benefit phase-out and income tax is not economically meaningful. Transfers should mostly be cash payments and depend on age and health rather than on choices made by recipients, with exceptions for in-kind healthcare (to target aid to less healthy people) and in-kind benefits to children (since their parents might not spend money in the children’s interests). Work requirements and large work incentives are problematic because they empower employers, make low-wage workers dependent on employers, and prevent transfers from reaching the absolutely poorest people when they need money most. – AI-generated abstract.