Hacker News Reader

Comment by bsbechtel | Hacker News Reader

I feel like there would be a number of arbitrage opportunities that would become available as well, though it's late and I can't think of any off of the top of my head. How it affects the currency exchange markets would be interesting as well. IMHO, a better option would be to provide Tax credits to employers for each employee's pay up to the poverty line. If employers don't pay poverty level wages, the government is stepping in with federal benefits. A tax credit is a more efficient transfer mechanism than the current system as well, but still encourages some sort of productivity.

View on HN

The UK does something like this. It's a disaster, because it gives employers an excuse to cut wages knowing that the government will cover the rest - effectively a handout to employers, who don't usually need the money, not to employees, who do.

It's also a disaster because the UK gov is famous for changing payment rules, sometimes retrospectively. The most recent changes leave some of the poorest people owing between a quarter and twice a year's income in supposed overpayments - which they accepted in good faith, with no suspicion that the government would change its mind about them later.

Any tax credit scheme is going to be open to similar abuse - whether accidental, because of incompetence, or deliberate because of political malice.

Could you link to what you're referring to so I can understand better? I think we are talking about different things. The tax credit would go to the employer, not the individual. Based on your statement, i think you are talking about the UK version of the EITC?

The EITC has got you covered:

https://en.wikipedia.org/wiki/Earned_income_tax_credit

Not the same thing. The tax credit I'm talking about goes to the employer. Right now, we just tax the employer (or the wealthy owners of the business) and redistribute. Let's cut out the middleman that's the government, and not tax employers who pay their employees up to the poverty level.

Ah, I misunderstood. It looks like a version of this exists which provides tax incentives to hire veterans, food stamp recipients, and other disadvantaged groups.

https://www.doleta.gov/business/incentives/opptax/wotcEmploy...

Yes, this looks similar to what I was thinking....basically employers are paying what would otherwise be a government expense to provide federal benefits to these individuals, so those employers are saving the government money. I don't have time to research now, but I would be curious to learn if the program is successful - is it revenue neutral? How much of a credit do employers get? etc...

Reply on news.ycombinator.com