3. Policies to reduce poverty Aa Aa Several types of public policy have been use

Question

3. Policies to reduce poverty Aa Aa Several types of public policy have been used to attempt to alleviate poverty, with varying success. One example is antipoverty programs tied to family income. An important drawback of this type of policy is that it can result in effective marginal tax rates that can harm incentives towards work. One adjustment that can be made is to gradually reduce benefits as incomes rise. However, this adjustment has a drawback in that the more gradual the phase-out of benefits, the the burden on taxpayers. A similar drawback occurs with in-kind transfers. By providing the poor with food and shelter, taxpayers can be more confident that they are not supporting harmful addictions. Yet, an unintended consequence is that in-kind transfers may result in compared to giving the poor direct cash payments.

Explanation / Answer

1). Increase marginal tax rates

2).Higher the burden

3). Corruption/black market of govt. food

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