Welfare reform : changing the way we account for taxes and benefits

Abstract

The issue of welfare reform is made difficult because of the boundaries we traditionally (yet implicitly) place between the tax system and the benefit system. To most economists, benefits are transfers, and transfers are equivalent to negative taxes. The key insight here is to turn this proposition on its head, to suggest that tax concessions are really benefits and should therefore be accounted for as such. Somewhat disconcertingly for many people, this means that almost all of us receive some income that can best be understood as benefits ...