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January 13, 2009

Comments

Tom

Instead of writing a check to everyone, it would be better to just cut taxes, if giving people money is the goal.

Ron Paul on the campaign-trail advocated getting rid of the IRS and income tax altogether, and cutting government discretionary spending by 80%. I don't know if I'd go that far, but I like that direction better than the one we're going in right now.

Nathan Smith

Well, not exactly. First of all, giving money away $5,000 per person would be *redistributive.* That may be good or bad; anyway, it's an important difference. To the extent that anything came through of Obama's program, I think it's probably that he's going to be a bit more redistributionist: more taxes on the rich, tax cuts for the poor. You can't, properly speaking, cut taxes on those who pay no taxes. If you want to give money to people at the lower end, you have to just write checks. And to minimize the resulting perverse incentives and means-testing etc., just write it to everyone.

Now, there's an argument that people who pay more taxes do so because they earned more, so they deserve to get the relief. There's something to be said for that. In this case, though, it seems like the government has the ability and a reason to throw a lot of money around for the simple reason that the money multiplier is collapsing and American democracy is the only institution left that people really trust. That's why I'd prefer to think of it as a windfall and just distribute it equally to all citizens.

I would also like to set a precedent for this kind of redistribution, because it could then be used for my immigration schemes. Once people realize that it's nice getting checks from the government, they might be willing to open the borders in order to get more immigrant tax dollars to finance them with. I should say that I'm still not totally comfortable with the idea of people getting checks from the government for nothing. It just seems a lot less harmful than a lot of other policies that it might be able to displace. People have votes and they'll use them self-interestedly. Writing a check is a less destructive bribe than immigration restrictions or bailing out the UAW or most of the other things people want the government to do for them.

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